20 December 2018

M&A value hitting the high points despite political volatility

Increased geopolitical turbulence has not slowed down a vigorous global transactions market, according to Allen & Overy report.

The firm’s ‘M&A Insights’ quarter four report highlighted ‘a growing accent on very big, strategic deals,’ with the value of transactions up by 32 per cent compared to 2017 figures. This is in spite of difficult political conditions, including Brexit and the US and China trade war, and what the report calls ‘a lurch towards protectionism.’

Political volatility

The rise in activity is despite a 10 per cent fall in deal volumes, with cross-border activity continuing to grow its market share. The report states megadeals ‘are dominating again.’ Transactions over US$10 billion rose by 120 per cent ‘to reach their second highest figure in the last 15 years.’ The number of deals exceeding US$5 billion ‘are also at their highest level for a decade.’ Allen & Overy’s global co-head of corporate, Dirk Meeus says ‘continued boardroom confidence in the context of global market volatility flies in the face of the accepted wisdom that M&A likes certainty.’ He added that ‘this era of disruption offers new opportunities, with gaining access to transformational technologies a powerful motivation to do deals across almost every sector, particularly bringing TMT and life sciences deals to the fore.’

Asia focus

The report notes that ‘while companies remain resolutely global, we may see some choosing to focus on one or two regions.’ The Asia-Pacific region, excluding China, saw a 35 per cent increase in deal value compared to figures from the same period in 2017. A 12 per cent share of global M&A deals by value places APAC on par with Greater China’s M&A percentage, which saw a 15 per cent dip in deal values from 2017’s figure of 25 per cent.