global increasing factors acquisitions activity political hard

techsuch May 9, 2021 0 Comments

2017 Mergers & Acquisitions (M&A;) ReportWe observed last year that several factors were encouraging corporate cautionand promoting market unpredictability. These included political uncertainty,volatility in equity markets, expected increases in interest rates, andtightening of regulations, particularly with respect to tax-driven deals. It’shard to argue that the political seas have calmed in the past 12 months.Indeed, in some areas—such as the prospects for global trade and continuedglobal economic integration—they are more roiled than ever. Nonetheless,markets seem to have regained confidence, and activity continues at fullspeed, despite broader uncertainties and increasing concerns about whether ornot a peak has been reached or a potential bubble has begun to form.Two macro factors still weigh heavily on the minds of CEOs: low growth inmature economies and cheap money. With a few exceptions, organic growth ishard to come by, and while shareholders used to look skeptically at attemptsto grow inorganically, they now realize that M&A offers one of the few provenavenues to higher revenues and earnings. At current borrowing rates, at leastin developed markets, acquisitions are easily and inexpensively financed. Thefirst factor, low growth, is likely to be with us for some time. The second,cheap money, is more likely to reach an expiration date. However, we mightobserve differences in geographic momentum given that the European CentralBank is staying put while the US Federal Reserve is increasing rates slowly.## Three Big TrendsEmbedded in this worldwide investment climate are three major M&A trends.China goes shopping. China embarked on a global shopping spree in 2016, morethan doubling, to almost $200 billion, its 2015 announced deal value. Abouttwo-thirds of China’s M&A activity today is outbound, with Europe and NorthAmerica emerging as the most attractive target regions. (See Exhibit 4.)

Leave a Reply

Your email address will not be published. Required fields are marked *