Dealmakers Anitipates a Continuation of the Rise of the M&A in 2018

Majority of lawyers and investment bankers anticipate seeing mergers and acquisitions (M&A) and equity capital markets continue to rise this year.

A massive 77 percent of the respondents to a survey that was conducted by Thomson Reuters said that they expected to see an increase in M&A activity this year, while 21 percent predicted that it would increase by more than a quarter.

Meanwhile, 60 percent of the corporations included “funding acquisitions” in their top three priorities for the utilisation of cash reserves this year.

The director of Deals Intelligence at Thomson Reuters, Matthew Toole, stated: “Many companies are in good health, with expectations of steadily rising revenues, capital expenditures and employment.

“Rather than sit on cash, the widely shared expectation is for companies to deploy capital on strategic acquisitions – a trend we’ve seen so far in 2018 with double-digit percentage gains for deal-making across all regions.”

Global deal activity has soared by 38 percent so far this year compared to the same period in 2017 to achieve more than $800bn. It is considered to be the strongest start to a year since 2000. The M&A activity in Europe is at a 12-year high.

According to 47 percent of the respondents, “undervalued assets” were a fundamental driver behind the deals. They also cited “achieving economies of scale” and “high-growth businesses” as reasons for the increase of the M&A activities.

Regulatory compliance also arose, especially in Europe where 51 percent of the respondents perceived this as driving consolidation. Sweeping new regulation has hit the asset management industry this year already, and upcoming laws on data protection will also cause an excitement across a range of sectors.