CONCLUDING REMARKS
But assuming that common sense solutions prevail, with global trade and investment frameworks remaining supportive of the flow of goods, services and capital, new windows of opportunity for M&A and IPO activity should open around the world. Our forecast shows transactional activity rebounding in 2018 in developed markets, and a year later in emerging markets. We forecast that global M&A deals will drop slightly from US$2.7 trillion in 2016 to US$2.5 trillion in 2017, then peak at US$3 trillion in 2018. Global aggregates for M&A will drop slightly in 2019 and 2020, as US interest rates approach equilibrium, and global equity valuations start to cool. Global IPO activity will follow a similar trajectory, with total proceeds more than doubling from US$131 billion in 2016 to a peak of US$275 billion in 2018 and 2019. North America will continue to be the largest market for M&A transactions, accounting for 50% of global deal making by value from 2016 to 2018. But growth is likely to be higher in Europe over the next few years, as its M&A cycle is at an earlier stage, the economy is strengthening and monetary policy remains supportive. Despite recent volatility, Asia Pacific companies still have a strong appetite for acquisitions, which should spur a resurgence of deal making in 2018 and 2019. Asia Pacific also continues to be an attractive target for foreign buyers looking to gain a foothold in economies with faster growth potential than in other markets. The outlook for M&A and IPO activity in Latin America will remain challenging as the region grapples with low commodity prices, slower economic growth and political instability. We do not expect a significant recovery of deal making until 2018 and 2019 when the region’s economic outlook improves. We also expect deal making to remain subdued in Africa and the Middle East. A broader-based recovery in transactional activity is unlikely until 2018, but should start to improve when commodity prices firm. Barring further shocks to confidence, investor focus will shift from short-term uncertainty toward the longer-term needs of households and businesses. Value will become more apparent in sectors such as energy and industrials that have seen the greatest falls in prices. With massive cash reserves sitting on corporate balance sheets and private equity dry powder near record levels, investors will have the firepower they need to pursue acquisitions.
The outlook presented in this report reveals that investors are likely to remain apprehensive about deal making into 2017 amid major uncertainties about the new relationship between the UK and Europe, and the US and the rest of the world.
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Michael F. DeFranco
Koen V. Vanhaerents
Contact
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Global M&A Outlook
Regional M&A Outlook
Sector M&A Outlook
IPO Outlook
Appendix A: Transaction Attractiveness Indicator
Appendix B: Country Forecasts
Appendix C: Methodology
M&A Transactions (US$B)
M&A Transactions (# Of Deals)
Domestic IPOs (US$M)
SUMMARY
INTRODUCTION
MACRO TRENDS
Baker-McKenzie-New-Logos
RISKS
CONCLUSION
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