2015 Prediction: Global M&A Activity Levels to Grow by +11% Over 2014, Says Intralinks

Jul 30, 2015

Forget the hocus-pocus of crystal balls, fortune cookies and Zoltar machines. Want to know the future of M&A? It’s simple. Just read our Intralinks® Deal Flow Predictor (DFP) and watch our video to get an accurate forecast of global M&A activity for the rest of this year.

Even though 2014 was by far one of the strongest growth years for global M&A (up 11 percent compared to 2013), M&A’s comeback has never been as clear as in the first half of 2015. 2015 will be a banner year for global M&A activity, with the number of deals predicted to break the records set in 2007. In just the first half of 2015, there has been a 48 percent increase in the number of announced deals, or deals valued at more than $5 billion, including Shell’s $81.5 billion acquisition of BG Group and Charter Communications U.S. $79.9 billion acquisition of Time Warner Cable.

The Intralinks DFP is a unique predictor of future M&A activity. Based on insights from the current issue of the Intralinks DFP, we expect global deal activity levels for Q4 2015 to surpass 2014’s levels, with growth expected to be in the double digits compared to last year. The latest Intralinks DFP data tells us that announced deal volumes are predicted to increase by 8 percent in the second half of 2015 compared to the second half of 2014 and by 11 percent for the full year of 2015 compared to 2014.

Deal Volume and Market Trends

Globally, we are seeing the strongest increases in early-stage M&A activity in the High Technology, Retail, Consumer Products & Services, Real Estate, and Media & Entertainment sectors. By contrast, we are seeing a decrease in early-stage M&A activity in the Energy & Power, Industrials, and Mining sectors.

Regionally, dealmaking is on track to remain especially robust in Asia Pacific (APAC), North America (NA) and Europe, Middle East and Africa (EMEA), sustaining double-digit LSM growth and increases in quarterly YoY. Latin America (LATAM), on the other hand, continues to struggle.

By far, APAC is seeing the most growth in early-stage M&A activity this year, with 16 percent LSM and 34 percent quarterly growth on a YoY basis. We expect M&A levels in APAC to exceed last year’s, even with slowing economic growth in China and slight weakness in Japan. One driver of this is the fact that South Korea is in the process of either relaxing or abolishing a number of regulations, which will encourage corporate takeovers and private equity activity and facilitate the M&A process.

The NA and EMEA M&A markets also remain strong, with solid growth of 10 percent LSM and 7 percent quarterly YoY. In NA, valuations are expected to reach a new high, despite concerns of a price bubble. In the first half of 2015, average deal valuation multiples in the U.S. have risen to 16.5 times EBITDA, beating 2007’s record of 14.3 times, according to announced deal data from Thomson Reuters. Early-stage M&A performance in EMEA remains strong, particularly in Italy, Spain, and France, making me think that the threat of a “Grexit” will not have an immediate impact on M&A activity levels.

In LATAM, dealmaking remains weak, with a 3 percent decrease in quarterly activity YoY due to a slowdown in Brazil’s economy and the impact of declining prices in key exports. However, on a positive note, this is the first period since Q4 2013 that LATAM has shown a slight increase in early-stage M&A activity over the LSM, with growth in early-stage M&A activity of 0.5 percent.

Dealmakers Optimistic About the Future

To better understand dealmakers’ perspectives about the future deal environment, during Q2 2015, Intralinks conducted a survey of 500 M&A professionals. The findings of our Intralinks DFP data are consistent with the responses to our global sentiment survey.

Based on our survey results, we believe that dealmakers are still optimistic about the future deal environment, with 57 percent of respondents expecting to participate in more deals than six months ago and 59 percent expecting overall deal volumes to increase. These views do, however, vary by region: 58 percent of dealmakers in North America are optimistic about the current deal environment, compared to only 29 percent in Latin America. Although dealmaking in LATAM continues to lag, the rest of the regions are poised for an M&A boom year. It goes without saying that 2015 will be a year to watch.

Still want to rely on clairvoyants and tarot cards? Didn’t think so…

Download the Intralinks Deal Flow Predictor for Q4 2015 to gain more insights on predicted Q4 2015 M&A activity levels.

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For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com or my personal website at www.BuySellFLbiz.com.