M&A Index: M&A expected to make a strong resurgence by mid-2014

M&A expected to make a strong resurgence by mid-2014, bolstered by strong economic figures from the U.S. and Europe

• The index predicts global deal volumes to reach nearly 8,000 in Q2 2014, up 10% from Q2 2013
• The forecast anticipates around 15,700 deals for H1 2014, the best start to an M&A year since 2011

New York, 11 April 2014 - Global M&A deal volumes are forecast to reach 8,000 deals in the second quarter of this year, according to Deloitte UK’s M&A Index. This is an increase of nearly 10% from 7,250 deals a year ago. The forecast also puts deal volumes for the first half of this year at approximately 15,700, the best start to an M&A year since 2011.

Timothy Mahapatra, Managing Director, Global Financial Advisory, Deloitte Touche Tohmatsu Limited, comments: “A recent flurry of mega deals have provided a much needed boost to the global M&A market, with over $500bn worth of deals announced in the first two months of 2014 alone. Strong economic growth forecasts in the U.S. and major western economies are set to continue to have a positive effect on M&A market sentiment.

“According to the M&A Index, while the S&P 1200 share price index is at an all-time high, revenue growth has declined by 3 percent since 2012. Under pressure to stem this fall, M&A activities are seen increasingly as providing a compelling way to enhance revenues and profits.”

The analysis shows that U.S. companies have started to become more active in global M&A markets. In Q1 2014, they were involved in 38 percent of all global M&A transactions up from 34 percent in Q4 2013. In February 2014, industrial production grew at the fastest rate in six months – a positive sign that business investment may take off in 2014.

European companies were involved in 35 percent of all global deals by disclosed values in the first quarter of 2014, up from 27 percent during the same period in 2013. This trend is consistent with the 15 percent drop in cash reserves of European companies from $930 billion to $822 billion.

At a sector level, Technology, Media and Telecommunications (TMT) companies saw the most activity in the first quarter of 2014 with total deals worth $174.3 billion, compared to $105.7 billion in the first quarter of 2013.

Mahapatra concludes: “With the ongoing revolution in digital, it is not surprising that the TMT sector is at the forefront of deal making activities. We have seen cross industry convergence as TMT companies look outside of their current business models for growth. We expect this trend to drive significant transaction volumes for the rest of 2014 and beyond.”

The Deloitte UK M&A Index is a forward-looking statistical indicator that forecasts future global M&A deal volumes and identifies the factors influencing conditions for deal activities.

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