Morrison & Foerster M&A forecast flags strong growth and tech trends, but warns on US and China deal-making and shareholder acitivism.
In the US, prospects for 2019 remain strong, with companies eager for growth and capital, which is still abundant and relatively cheap, despite the Federal Reserve’s recent moves away from its low interest policy, the forecast states. However, there are risks that could slow M&A activity.
Deals and activism
The outlook for cross-border deal-making activities in Asia is marked by deals between the US and China continuing to decline, with inbound value falling to just under $3 billion in 2018 from $8.7 billion in 2017. However, Chinese bids in Europe in 2018 rose 81.7%, to $60.4 billion. The impact of trade tensions and Committee on Foreign Investment in the United States (CFIUS) reforms suggest that despite these concerns, the US market continues to attract significant investment interest from abroad, and while the regulatory landscape continues to evolve, deals continue to be done. In respect to activists, the forecast warns, ‘boards contending with activists in an M&A setting need to keep in mind their legal duties within the company’s overall context as well as the demands of activists and the apparent wishes of their shareholders.’
The forecast for trends in the tech M&A sector flags a trend that continues to reshape the M&A market, namely the participation of ‘non-tech’ companies as major buyers in the technology market. Deal-makers anticipate this trend will continue, with 68% of respondents to MoFo’s October 2018 Tech M&A leaders’ survey predicting an increase over the next three years in non-tech companies acquiring tech companies.