January 17, 2019

The Latest Merger Trends

According to this Deloitte survey, despite recent headwinds, dealmakers continue to expect a robust M&A environment during 2019. As this excerpt suggests, both strategic & PE buyers are upbeat about prospects for the new year:

Survey respondents are increasingly bullish on expectations for M&A deal activity over the next 12 months. On the corporate side, 76% of respondents say they expect the number of deals to increase, up from the prior year when 69% projected a gain. On the private equity side, 87% of respondents foresee an uptick in deal flow, a considerable increase, up from 76% a year earlier.

Respondents from larger private equity funds are almost unanimous in their anticipation of more deals in 2019, as 94% of respondents at funds larger than $5 billion expect an increase compared with last year. Interestingly, there is not the same correlation among corporations; only 65% of respondents at the biggest companies ($5 billion or more in annual revenue) see accelerating deal flow in the next 12 months.

Corporate respondents from financial services, energy and resources, and telecommunications, media, and technology (TMT) industries were the most optimistic, in sequential order, on the likelihood for more deals in the year ahead.

A significant number of respondents not only think M&A activity will increase during 2019 – but that it will increase significantly. Nearly 1/3rd of corporate respondents anticipate a significant uptick in deal activity, and so do 29% of PE respondents.  Last year, only about 25% of corporate respondents said deal activity would grow significantly, and only 19% of PE respondents felt the same way.

John Jenkins