The Deloitte M&A Index 2016
Opportunities amidst divergence
A forecast of future global M&A deal volumes and a discussion of the factors influencing conditions for deal making.
The weak Australian dollar has given a boost to inbound M&A into Australia and domestic deals in Asia-Pacific have been the highest in over a decade, totaling $851 billion and largely led by China. While we expect the Chinese domestic M&A market to slow down in light of lower economic growth, outbound investment will continue as Chinese companies seek new markets.
M&A activity of Indian companies in value terms has grown 6.1% year on year during the first three-quarters of 2015, led largely by the return of private equity deals and an increase in cross-border deals by Indian companies.
The weak Australian dollar has given a boost to inbound M&A into Australia. We expect this trend to continue with the dollar expected to fall further in early 2016, sustained low interest rates and weak commodity prices. Inbound acquiriers including sovereign wealth funds, state owned enterprises, global infrastructure investors and private equity will continue to search for opportunities to invest and acquire.
- 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.