M&A Deal Activity Expected to Remain Robust in 2016

US interest rate increase not seen as 2016 M&A concern by many

Jan 07, 2016, 08:50 ET from Deloitte

NEW YORK, Jan. 7, 2016 /PRNewswire/ -- M&A is expected to stay hot in the new year, according to a December Deloitte poll showing 47.6 percent of respondents expect an increase in deal flow involving US companies in 2016.  In particular, despite record levels of US mega-deals (valued at $10 billion or more) in 2015, respondents remain bullish that 2016 levels will increase or remain elevated similar to 2015 levels (46.4 percent).  Just 13.2 percent of respondents say a US interest rate increase will pose a major challenge to 2016 M&A.

"Going into 2015, many of us in M&A anticipated a favorable mega-deal market, but what we are evidencing has exceeded even these expectations.  US M&A activity in 2015 has eclipsed peak 2007 levels and the number of mega-deals has tripled to close to 50," said Russell Thomson, Managing Partner of Deloitte's US Merger & Acquisitions Services practice.  "Combining many of the fundamental drivers of 2015 activity that remain favorable in the US with the current divergence in economic growth and monetary policies around the world, we expect 2016 to provide further opportunities for M&A."

Thomson continued, "While it remains to be seen what the mid-December US interest rate increase and potential for ongoing increases will do to M&A activity in 2016, I don't expect the initial impact to be a large one.  What I am watching more closely is the impact of the strong US dollar and relative valuation differences between significant global markets which may further stimulate cross-border deal opportunities for some geographies."

Other poll findings show:

  • Respondents are torn on what US company IPO volumes to expect in 2016 compared to 2015, as 36.9 percent expect an increase and 21.1 percent expect a decrease.
  • The biggest M&A challenges for 2016 include over-inflated valuations (20.7 percent), U.S. political uncertainty (16.8 percent) and continuing economic softness in the Eurozone and China (16.5 percent).
  • By a wide margin, North America (48.8 percent) will be the top M&A market for respondents' organizations, over China (6.8 percent), Western Europe (5.9 percent), Latin America (3.5 percent), and other emerging markets (4.7 percent).

About the online poll
More than 2,300 professionals responded to polling questions during a Dec. 9, 2015 webcast, titled "2016 economic outlook and M&A environment forecast: A global economy in flux."  Respondents work in a range of industries including financial services (26.6 percent); commercial and industrial products (25.5 percent); and technology, media and telecommunications (17.8 percent).

About Deloitte M&A Practice
Deloitte advises corporate buyers and private equity investors throughout the entire M&A deal lifecycle from strategy development to selecting the right partner and from conducting thorough due diligence to closing the deal. Throughout the integration process or even through a divestiture, we align our services to address clients' transactional and integration needs, all with the goal of building value for our clients.

As used in this document, "Deloitte" means Deloitte LLP and its subsidiaries.  Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.


Shelley Pfaendler
Public Relations
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SOURCE Deloitte