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Insights

The Deloitte M&A Index Q4 2014

Mega-deals lead the resurgence in M&A markets

The Deloitte M&A Index is our flagship publication a forward looking indicator that forecasts future global M&A deal volumes and identifies the factors influencing conditions for deal-making. The M&A Index is a dynamic and evolving model that has a 90 per cent accuracy rate dating back to Q1 2008.

Key points

  • So far this year, companies have spent $2.5 trillion on M&A activities. This makes 2014 the best year for deals by value since 2007. This year will go down as the year when mega-deals (> $10 billion) made a comeback and so far 26 such deals have been announced amounting to $672 billion.
  • We forecast global deal volumes in Q4 2014 to recover and reach around 8,500, which will make a total of around 31,500 for the year. Though less pronounced, it represents an increase of 3% over last year and would make 2014 the best year for volumes since 2011.
  • Looking ahead to 2015, following the end of the US quantitative easing programme, the pace of the US economic recovery is expected to continue. However other economies, including the Eurozone and many of the emerging markets are facing challenges. These diverging economic trajectories mean that the US companies could take advantage of an appreciating US dollar to pursue cross-border M&A deals.
  • Globally corporates are in a position of strength, they have record levels of cash reserves, have rebuilt balance sheets, stock market rallies have lifted their share prices and M&A spend as a percentage of market capitalisation remains lower than average. However the conditions for global economic growth remain challenged and with heightened geo-political risk and investor scrutiny following high-profile deal withdrawals, we expect companies to display patience and consideration while pursing M&A activities in 2015.

Download previous editions of our M&A Index:

Q3 2014 M&A Index - Rising 'animal spirits' continue to stoke M&A activity

Q2 2014 M&A Index - Growth is back on the corporate agenda

H2 2013 M&A Index – Recovery of deal volumes expected in H2 as sentiment improves

Q2 2013 M&A Index - Strong US recovery to push M&A volumes higher

M&A Index Q4 2014

The M&A Index is created from a wide range of weighted market indicators, including macroeconomic and key market indicators, funding and liquidity, company fundamentals and valuation data. Each quarter, these variables are tested for their statistical significance and relative relationships to M&A volumes.

As a result, we have a dynamic and evolving model which allows Deloitte UK to identify the factors impacting deal-making and enables us to make a projection of future M&A deal volumes. The Deloitte M&A Index has a 90 per cent accuracy rate dating back to Q1 2008.

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