April 2015 | 12th edition
Global Capital Confidence Barometer
Innovation, complexity and disruption define the new M&A market
Our 12th Global Capital Confidence Barometer finds the global M&A market maintaining the positive momentum that developed during 2014. For the first time in five years, more than half our respondents are planning acquisitions in the next 12 months, as deal pipelines continue to expand.
Executives express increasing optimism in the global economy, with much broader consistency across geographies than in 2014. This economic optimism, combined with steady confidence in corporate earnings and other leading market indicators, is fostering an environment where companies are preparing bolder moves, including M&A, to generate future value.
Our survey reveals three key reasons for the sharp increase in dealmaking intentions. First is the arrival of new entrants — both startups and companies returning to the market after staying on the sidelines for several years. Second, divergent economic conditions are accelerating cross-border M&A, as existing momentum in many developed markets is further fueled by falling oil prices and currency fluctuation. And third, disruptive innovation is driving dealmaking at every level of the enterprise.
Of course, challenges remain prominent on the boardroom agenda. Greater volatility in commodity and currency markets, geographic divergence in economic conditions and monetary policies, and lingering geopolitical concerns all present complexity. As well, rapid technological change is creating new risks such as cybersecurity, which has emerged as a core business issue that must be managed as part of the dealmaking process.
Notwithstanding these risks, the overall view in this Barometer is of a global M&A market on an upswing after years of crisis. Companies are learning to create opportunity and drive growth amid a more competitive economic and geopolitical landscape. After a half-decade of stagnation, we are seeing the bold beginnings of a new kind of M&A market — one marked by innovation, complexity and disruptive change.
While costs and efficiencies are always a primary boardroom topic, the recent fluctuations of currencies and commodities have further elevated the prominence of cost reduction in the short term.
Faster growth rates and favorable demographics in key emerging markets are expected to feature prominently over the next decade, as the gulf between developed and emerging countries continues to shrink.
Transactions are a prime target for cyber attacks. The M&A market rebound, coupled with heavy reliance on technology and digital assets in today’s transaction environment, is a recipe for increased cyber attack risk.
Percentage reflects those who intend to actively pursue acquisitions in the next 12 months.