Key points
- We are expecting 2015 to end with over $4 trillion worth of deals making it the highest for deal values since 2007. However, on a last twelve-months (LTM) basis, there was a slowdown in the volume of transactions in the second half of 2015.
- 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. In addition, new corridors have started emerging between Asia and Europe, led by China and Japan, and are likely to continue in 2016.
- Our analysis shows that 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. Therefore delivering these synergies will be high on boardroom agendas.
- The threat of disruptive innovation is impacting the traditional products and markets of many companies. In response they are launching venture funds to seek and invest in new sources of innovation, which could lead to smaller, but more strategic deals.
- 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, we expect such divergence to create M&A opportunities and define dealmaking in 2016.
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