The buoyant M&A market shows no sign of slowing with around six in ten (59%) companies looking to acquire in the coming 12 months, according to a survey by EY.
The EY Global Capital Confidence Barometer, now in its 13th year, is based on a poll of more than 1,600 executives across 53 countries. It suggests 83% of executives expect M&A activity to increase in the forthcoming year.
This follows a 2014 in which global deal value jumped by 35% – and the announcement of more mega-deals (worth $10bn or more) in 2015 than any previous year.
More than half of those polled (55%) currently have three or more deals in the pipeline and half of companies are looking to buy assets from outside their own sector.
The sectors with the highest level of M&A intent are oil and gas (69%), consumer products (67%), mining and metals (67%), diversified industrial products (66%) and power and utilities (65%).
Despite the large appetite for M&A deals, which is at the highest level for six years, senior managers are still exercising astute judgement in their own dealings.
Almost three-quarters (73%) of the executives polled said they have walked away from a deal in the past 12 months because it didn’t align with their strategy.
There were also some interesting geographic patterns in the report. Compared to six months ago, more respondents (40% versus 35%) now plan to allocate at least 10% of acquisition capital to emerging markets.
However, the majority of acquisition capital will be invested in developed markets. There is a significant increase (26%) in the number of executives now looking to acquire in the Eurozone
Pip McCrostie, EY Global vice chair, transaction advisory services, said that modest GDP increases mean 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,” she continued.
“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.”
Further reading: Top 15 deals M&A deals of 2015 H1 announced