M&A Outlook for 2017
M&A activity, in 2017, is expected to pick up dramatically for four reasons. First, the strong equity markets are generating optimism as they are usually a leading indicator. Second, in a recent survey, an unprecedented number of business owners or executives claimed they are planning an M&A transaction in the next 12 months. Third, many domestic and European companies have accumulated large cash balances that are available for acquiring new businesses. Fourth, private equity firms are sitting on a record US$1.1 trillion in un-invested capital and are expected to boost the number of completed transactions globally.
It’s expected that the North America M&A market will be strong for the next three years, particularly in the US. However, M&A transactions in the US will peak at US$1.5 trillion in 2017, which is indicated in the chart below.
Logically, sellers should take advantage of 2017’s robust forecast.
On a global scale, US$2.7 trillion of M&A transactions were completed in 2015. It’s been forecasted that US$3 trillion of M&A transactions will be closed in 2016. In 2017, it’s expected to increase, again, to US$3.4 trillion.
With regard to the European market, inbound M&A transactions, by US companies taking advantage of a stronger US dollar, are expected to increase. The UK, Germany and Spain are the most attractive investment destinations, while France and Italy remain less interesting.
On the other side of the world, the re-emergence of Asia as one of the world’s most dynamic growth stories is steady and striking. China Yuan’s depreciation and the bursting asset bubble have spurred increasing outbound activities by Chinese buyers into neighboring Asian countries as well as developed countries. At the same time, the Chinese Government is starting to control this outbound activity, which may alter some of this activity.
Lastly, the Africa and Middle East markets are worth paying attention to as oil prices rebounded after OPEC announced production cuts. A recovery in oil prices will enable more available funding, which subsequently may boost deal-making activities in the region.
Versailles Group is a 30-year-old boutique investment bank that specializes in international mergers, acquisitions, and divestitures. Versailles Group’s skill, flexibility, and experience have enabled it to successfully close M&A transactions for companies with revenues greater than US$2 million. Versailles Group has closed transactions in all economic environments, literally around the world.
Versailles Group provides clients with both buy-side and sell-side M&A services, and has been completing cross-border transactions since its founding in 1987.
More information on Versailles Group, Ltd. can be found at www.versaillesgroup.com.
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Founder and President - Versailles Group, Ltd.
15 December 2016