The deal momentum continues into 2015
Key points
- In our previous reports we highlighted that globally corporates are in a strong position to pursue M&A. They have rebuilt their balance sheets, accumulated record levels of cash and stock market rallies have boosted their valuations.
- Our projections of the M&A volumes show that the momentum that started last year is continuing in 2015. Despite the expected dip from Q4 to Q1, the Deloitte M&A Index forecasts deal volumes for H1 2015 are likely to be 8% higher than for the same period in 2014. So far this year $583 billion worth of deals have been announced, surpassing the $563 billion announced in Q1 last year.
- M&A volumes are being influenced by factors such as the decline in oil prices, appreciation of the dollar, the rise of China as a global player in M&A and pressure from investors to focus on top-line growth. The diverging growth trajectories between the US and other economies are opening 'deal corridors' for US corporates to acquire attractively priced assets abroad. We estimate nearly one in four dollars spent on deals in Europe last year was either from the US or Asian countries such as China.
- In addition to the UK, six other European nations are planning to hold elections in 2015. The build up to US elections next year will also start in the coming months. These events could have a temporary impact on the pick-up in deal momentum.
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