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Surge in M&A transactions seeing ‘overheated’ market
A new report by Clifford Chance has shed light on key themes set to play out in M&A for the rest of the year, with such indicators pointing to what could be an “overheated” market.
Emma Musgrave
Clifford Chance’s M&A Trends Report, drawing upon MergerMarket data, has reflected on some of the key themes playing out in 2018 with regards to M&A transactions, enabling the firm to set out its expectations for the rest of the year.
“This year has seen M&A values soar, with nearly US$2 trillion deals announced in the first half, matching pre-financial crisis levels,” said Guy Norman, global head of corporate at Clifford Chance and co-author of the report.
“The global picture is characterised by a slightly smaller number of deals overall, but very high valuations for the most desirable and largest targets. More mega-deals are expected in the final months of the year, as data-driven M&A and consolidation in certain sectors continue.
“Accessible debt and a steady flow of repatriated cash into US-based multinationals will continue to drive the US market.”
That being said, Mr Norman noted, headlines of “record-breaking” M&A values “mask an underlying reality, where economic indicators and very racy multiples are pointing to an overheated market, and politics are increasingly getting in the way”.
“Whilst large US and multinational businesses continue to make bold strategic moves, we are seeing smaller businesses become more circumspect, waiting to see how global and regional politics and related economic and currency impacts might play out. As boardrooms pause, this leaves more room for nimble financial sponsors,” he added.
“As we assess the final months of the year, trade dynamics are in the spotlight. M&A may be negatively impacted as trade relations between the US and the rest of the world deteriorate, and concerns grow around other regional trade dynamics (e.g. the UK/EU). We expect greater protectionism in M&A situations, making deals increasingly at risk of being blocked at the highest political levels.”
Emma Musgrave
Emma Musgrave (née Ryan) is the managing editor, professional services at Momentum Media.
Emma has worked for Momentum Media since 2015, including five years spent as the editor of the company's legal brand - Lawyers Weekly. Throughout her time at Momentum, she has been responsible for breaking some of the biggest stories in corporate Australia. In addition, she has produced exclusive multimedia and event content related to the company's respective brands and audiences.
Prior to joining Momentum Media, Emma worked in breakfast radio, delivering news to the Central West region of NSW, before taking on a radio journalist role at Southern Cross Austereo, based in Townsville, North Queensland.
She holds a Bachelor of Communications (Journalism) degree from Charles Sturt University.
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