United States: The Flood Of Inbound M&A And Outlook For 2017

Last Updated: March 15 2017
Article by Jeffrey K. Haidet

Despite its political turbulence, 2016 was a blockbuster year for inbound mergers and acquisitions in the US. According to Bloomberg, US inbound M&A hit an all-time peak of $586.7 billion, a 35.15 percent hike from 2015. In fact, approximately a third of all US-target deals involved foreign buyers, compared with 21 percent in 2015. These inbound transactions were mainly concentrated in the large- and middle-market sectors, with the most notable deals occurring in the pharmaceutical, materials and energy industries. A primary driver of the foreign interest in US-based deals was China, which saw its total outbound M&A output double year-on-year. This trend is due in part to the slowing of China's economy as companies look to move capital abroad.

With 2016's roaring inbound M&A market in mind, what can we expect in terms of inbound M&A in 2017? For now, most analysts are predicting that the US's cross-border M&A market will cool considerably in this new year, possibly slipping by 35 percent from the previous year. However, this level of M&A activity would still be an impressive figure overall and is indicative of the strong growth the global M&A market has seen over the preceding two to three years. We think the question investors should focus on is whether this rapid cooling will continue as a trend beyond 2018.

Since the current administration has positioned itself as being both business-friendly and populist, the cross-border M&A market could head in different directions. Investors tend to favor deal-making in an environment of deregulation and lower corporate tax rates, which causes transactions to be less cumbersome. Couple these anticipated policy trends with the continual growth rate of the US economy over the past few years, and one could expect a healthy climate for investment in the US that attracts companies from across the globe.

However, President Trump has deviated from the typical GOP policies in significant ways that could alter some investors' strategies for transactions. The first is his campaign promise to block the historic merger of AT&T and Time Warner to prevent further consolidation in the telecommunications, technology and media sector. Trump's seemingly strong antitrust stance on M&A represents a break from Republicans' friendliness towards company combinations over the past several decades. Whether he intends to act on this campaign promise is ambiguous at this time. A sitting president who disfavors industry consolidation adds uncertainty to investors' evaluations of whether to undergo a merger or acquisition.

Another major factor regarding cross-border M&A is Trump's "America First" focus regarding international trade and the industrial base, which could affect foreign parties' interests in cross-border M&A. Although any country could be affected by this policy, certain countries — such as China — may find assessing the impact of cross-border activity more challenging. From a regulatory perspective, these challenges may arise during national security reviews by the Committee on Foreign Investment in the United States. CFIUS is statutorily tasked with determining whether a particular cross-border investment or transaction affects US national security or critical infrastructure assets in the United States. According to Giovanna Cinelli, chair of Dentons' US National Security and Export Controls practice, Congress and several think tanks have taken an interest in analyzing whether the current CFIUS configuration meets stated US policy on security and trade. CFIUS' role has already expanded considerably in terms of scrutinizing inbound deals for security purposes. President Obama blocked at least two China-US deals during his two terms. (Only one other inbound M&A deal was formally blocked prior to Obama's presidency; however, a number of transactions were mitigated through divestment or restructuring of the transaction.)

Moreover, last September, 16 members of Congress asked the Government Accountability  Office to determine whether the "existing processes (including CFIUS, export controls, cyber security and counterintelligence) [are] sufficient to safeguard the national interests threatened by massive Chinese commercial and economic activity in the US" Depending upon the GAO's report, this review may recommend fundamental changes to the CFIUS process to better assess how foreign investment could affect US interests. Given the Chinese government's preference for acquiring sensitive technologies in such industries as semiconductors, aviation and aerospace, the GAO could recommend executive branch revisions to CFIUS, and Congress could revisit the current statutory authority.

In contrast to his three predecessors, President Trump is committed to pivoting, where it is in America's interest, from multilateral, free trade deals to bilateral agreements with stringent stipulations intended to check currency manipulation and the outsourcing of American jobs. President Trump is particularly bullish on substantively limiting  China's power in the Asia-Pacific region, promising to levy high tariffs against America's largest source of inbound investment. Whether he will convince Congress to draft legislation enacting his 45 percent tariff on Chinese goods is another question entirely. Analysts speculate that such bold, aggressive moves could ignite a trade war with China and restrict foreign direct investment from there.

Whether this action by the president could hamper M&A itself is debatable. After all, Japanese companies merely shifted their investment style during the US-Japanese economic policy tensions of the 1980s and '90s. To avoid high tariffs, these companies decided to build manufacturing plants in the US rather than export goods. Whether Chinese investors would do the same is hard to say, as is whether investing in brick-and-mortar capital could manifest itself in the form of cross-border M&A. But this style of investing could strengthen rather than weaken the inbound M&A market.

However, more barriers to outbound Chinese investment loom. China already is committed to encouraging investors to focus on transactions at home and in the greater Asia-Pacific region, as shown by its pushing of the Regional Comprehensive Economic Partnership trade deal after the collapse of the Trans-Pacific Partnership. Additionally, the Chinese State Council is considering altering rules to lessen the flow of capital out of the country. Either nudging by the state or an unfriendly economic climate due to rising prices stemming from protectionism could possibly cool Chinese investors' enthusiasm towards the US The Chinese government appears to be coaxing investors towards this behavior with its "One Belt, One Road" initiative, which aims to increase China's role in the Eurasian sphere by incentivizing businesses to invest in infrastructure and businesses in these countries.

In sum, the outlook for foreign investors (particularly those in China) looking to engage in M&A in the US is murky. Industry prognosticators often repeat the old adage that "if there's one thing investors hate, it is uncertainty." In this instance, given the directions the market could swing, foreign investors could simply choose to remain cautious when approaching cross-border M&A in the US, which could result in a cooling in the marketplace. Despite this uncertainty, however, we remain confident in the US market's current robustness. With a stable and growing US economy, an administration committed to increasing US jobs and investing in the country's infrastructure, and the strength of the global M&A market over the past several years, the stage is set for such optimism.

Catherine Dallas, Analyst, co-authored this article.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
24 Oct 2017, Seminar, Washington, DC, United States

The Dentons Forum for Women Executives invites you to join us for a luncheon featuring guest speaker Liza Mundy, journalist and author. Ms. Mundy recently released her latest book, Code Girls, the riveting untold story of more than 10,000 spirited young American women who cracked German and Japanese codes to help win World War II.

27 Oct 2017, Seminar, New York, United States

Please join us for a milestone event, our 10th annual CLE Seminar for In-House Counsel.

24 Jan 2018, Seminar, San Francisco, United States

Dentons will host our Fourth Annual Courageous Counsel Leadership Institute in January, centered on the theme "Cultivating Innovation."

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.