As 2016 draws to a close, I reflect on what a momentous year it has been in the world of Mergers & Acquisitions. This year witnessed some of the big changes in the strongest economies of the world.
- Volatility in the markets caused because of slow growth in China
- Brexit in Britain
- Trump’s election to Presidency in the USA
The year 2016 marked a year of change in the history of global M&A activity, as said by Matthew Toole, director of Deals Intelligence at Thomson Reuters. A year beginning with slowdown of aggressive acquisitions by Chinese firms, a downfall in M&A activity in North America and Europe because of market responses to political instability ahead of the US presidential election and the UK vote to leave the EU, 2016 was marked as the slowest first half around cross-border dealmaking since 2013. Dealogic revealed that the total M&A value was $1.71 trillion with an 18 percent year-on-year drop, from $2.09 trillion in 2015.
But opposed to the predictions, the second half of 2016 changed the vibe around M&A activity with Microsoft’s acquisition of LinkedIn for a deal of $26.2 billion and a $85.4 billion cash-and-stock takeover of Time Warner Inc by AT&T Inc. With two biggest deals in the technology and telecom sector, the year has continued to set records in the world of mergers & acquisitions.
With Asian companies acquiring the European ones and European companies targeting the US companies, the highlight of this year has been the east-to-west theme in global capital flows, as quoted by Colm Donlon, head of M&A for Europe, Middle East and Asia at Morgan Stanley. Thus, cross-border deal making has seen a rising trend this year.
I believe, the economic and geopolitical uncertainty around the world will cause a decrease in the world of cross-border deal making. With a rise in nationalist politics in such a globalised world, domestic M&A activity might increase in 2017, especially in regions such as China and Europe. With Brexit and the alterations in tax regimes due to election of Donald Trump in the USA, global M&A activity might see a downfall, giving rise to small and domestic M&A deals.
Do you think the changes in 2016 will cause uncertainty and dampen the global M&A activity or create room for new oppurtunities in the world of M&A?