The numbers are in for the first half of 2014 and they show an M&A market dominated by cross-border deals. With the advent of globalization and a renewed confidence from businesses across the world, international M&A activity is on the rise in terms of both value and market share.

In the H1 2014 Trend Report released by MergerMarket, several statistics demonstrate how robust the cross-border category has become in the global M&A market. During the first half of the year, cross-border deals accounted for 46.1% of all M&A activity. This figure represents the highest market share held by cross-border transactions on record (MergerMarket has been tracking M&A figures since 2001). The cross-border category easily outpaced its 36.4% share in H1 2013 and its 39.8% share in H1 2012. The total value of international deals in H1 2014 was $724 billion, which is a 107.4% increase from H1 2013 and an 80.3% increase from H1 2012. Although it did not break any records, cross-border M&A had its highest half-year since H1 2007. In aggregate, international M&A has reached pre-recession levels and is growing at a much faster rate than the rest of the market.

The value of the individual deals is also growing. H1 2014 had the highest average deal size on record, due in part to the increase in large-cap international M&A transactions. Of the ten mega-deals in Q2 2014 (MergerMarket defines a "mega-deal" as a transaction worth over US $10 billion), five of the mega-deals were international in scope. In the fifth-largest cross-border M&A deal since 2001, the Minneapolis-based Meditronic acquired Irish medical supply company Covidien for US $45.9 billion.

The trend towards large-scale international M&A transactions appears to be a new business reality in the post-recession world. One of the motivating factors behinds this trend is thought to be a general increase in the confidence of dealmakers and a corresponding willingness on their part to take risks. As we emerge from the shadow of the financial crisis, the recent rise in cross-border deals may be a manifestation of this increased risk tolerance. Not surprisingly, the most frequent and prevailing motivator for cross-border M&A seems to be access to new customers, and with increased risk tolerance, newly confident and solvent businesses are keen to expand by selling their offerings to new markets.

While it is too soon to tell whether the results from the H1 2014 are an aberration or the beginning of a paradigm shift in the M&A market, the rise of cross-border deals is a trend to watch.

The author wishes to thank Markus Liik, summer law student, for his assistance in preparing this legal update.

Norton Rose Fulbright Canada LLP

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