Wave of M&A means companies could add nearly US $2 trillion of value, if they capture all the announced synergies successfully
Business leaders have promised annualised cost synergies that amount to around 3-4% of the total deal value globally, according to analysis by Deloitte of publically announced annual synergies.
The Deloitte M&A Index 2016
Opportunities amidst divergence
The Deloitte M&A Index uses predictive analytics to forecast future global M&A deal volumes and identify the factors influencing conditions for deal-making. It has over 90% accuracy in predicting deal flows since 2008. The Index is Deloitte’s flagship thought-leadership for global M&A services.
Key highlights in this edition
- We’re expecting 2015 to end with over $4 trillion worth of deals making it the highest for deal values since 2007.
- Cross-border deals are a major feature of this M&A wave. More than $1 trillion worth of cross-border deals have been announced so far this year, of which a third were in the vibrant deal corridor between North America and Europe. New corridors have started emerging between Asia and Europe, led by China and Japan.
- Companies are committing to deliver annualised cost synergies that represent, on average, 3-4% of the transaction value. If all announced cost synergies are realised and sustained, they could add an estimated $1.5-1.9 trillion to the value of these companies. We can assume that delivering these synergies will be high on boardroom agendas.
- As this record-breaking year draws to a close, concerns over global growth are back, along with divergence in economic and monetary policies. Looking ahead, such divergence will create M&A opportunities and define deal making in 2016.
"As this record breaking year draws to a close, concerns over global growth are back, along with a divergence in economic and monetary policies. Also, variations in corporate performance and deal Price-to-Earnings Ratios (P/E multiples) between the US and Europe are creating more opportunities. We expect these conditions to define deal-making in 2016."
Iain Macmillan, Global head of M&A