March 22, 2017

Inbound US M&A: The Glass is Half Full

This Dentons memo reviews the outlook for inbound US M&A for 2017, and concludes that the glass is half full:

With 2016’s roaring inbound M&A market in mind, what can we expect in terms of inbound M&A in 2017? For now, most analysts are predicting that the US’s crossborder M&A market will cool considerably in this new year, possibly slipping by 35 percent from the previous year. However, this level of M&A activity would still be an impressive figure overall and is indicative of the strong growth the global M&A market has seen over the preceding two to three years.

Although acknowledging the uncertainties associated with the Trump Administration and potential restrictions on outbound Chinese M&A, the memo expresses optimism about the long-term outlook for inbound US deals:

In sum, the outlook for foreign investors (particularly those in China) looking to engage in M&A in the US is murky. Industry prognosticators often repeat the old adage that “if there’s one thing investors hate, it is uncertainty.” In this instance, given the directions the market could swing, foreign investors could simply choose to remain cautious when approaching crossborder M&A in the US, which could result in a cooling in the marketplace.

Despite this uncertainty, however, we remain confident in the US market’s current robustness. With a stable and growing US economy, an administration committed to increasing US jobs and investing in the country’s infrastructure, and the strength of the global M&A market over the past several years, the stage is set for such optimism.

John Jenkins