The recent wave of mergers and acquisitions (M&A) is set to continue with 59% of global companies now planning to acquire in the next 12 months, according to EY’s 13th Global Capital Confidence Barometer, a survey of more than 1,600 executives in 53 countries. This is the highest appetite to acquire recorded by the survey in its six-year history.
The Barometer finds an M&A market buoyed by record values in 2015 set for further growth in the next year. With global deal value up 35% on 2014 and more US$10b+ megadeals already announced in 2015 than in any previous year, the prospect of further growth in the M&A market looks certain. Four out of five executives (83%) expect activity to increase.
These positive sentiments are fueled by their own burgeoning pipelines –which continue to expand, with 55% of companies now having three or more deals under consideration.
Pip McCrostie, EY Global Vice Chair, Transaction Advisory Services, says:
“With modest increases in global GDP, organic growth alone is not enough for companies to expand and reshape at the pace they need. Technology and changing consumer preferences are disrupting business models and blurring sector boundaries. In that context, the search for growth is lifting deal-making to record highs – and executives are focusing on M&A to secure innovation, competitive advantage and market share for the foreseeable future.”
Acquisition appetite at a six-year high
The current deal environment is fostering M&A intentions. Executives are more confident than at any time in the past six years about the quality and number of deal opportunities and the likelihood of closing acquisitions.
Despite the high appetite to acquire, any fears about an overheating market can be tempered by strong rigor around deals. Executives are judicious about how they use M&A – almost three quarters (73%) have walked away from deals in the past 12 months because they were not fully aligned with their strategy.
“Executives are taking a long-term view and evaluating deals more carefully than ever before. They are stepping back when necessary. This is not ‘a deals for deals sake mentality,’” says. McCrostie.
