Appetite for M&A and alliances should drive elevated dealmakingOur 16th Global Capital Confidence Barometer indicates sustained optimism about the state of the economy among banking and capital markets (BCM) executives. We expect this confidence and market fundamentals to support strong dealmaking in the sector over the coming months.
Strong M&A fundamentals
Deal intentions are holding up, with 46% of BCM executives surveyed expecting to pursue acquisitions actively in the next 12 months —eight percentage points above trend. Almost all (92%) respondents see the global M&A market as either stable or improving over the next 12 months.
This active M&A market is underpinned by continued confidence in the number and quality of opportunities and the likelihood of closing acquisitions. With 85% of respondents believing that credit availability at the global level will improve or remain stable in 2017, capital market conditions also remain accommodating to dealmaking.
Higher valuations indicate a healthy market for M&A albeit with a focus on smaller, bolt on opportunities as 84% expect to do deals between US$250m and US$500m.
As start-ups disrupt traditional business models, acquiring innovation will continue to be a major theme for the coming months. The next year is also expected to see more acquisitions aimed at enhancing and reorganizing current business models and platforms to counter increasing competition, to gain new customers and to extend product offerings. This trend has been reinforced by companies looking to combine with disruptive players or with companies from other sectors.
With alliances and JVs now seen as equally important as M&A to BCM executives’ growth strategies, a key to success will be building a better ecosystem, not necessarily a bigger bank.
Read EY‘s Global Banking Outlook 2017 for more detail on why institutions must look for alternative ways to be organized and to operate.
EY Global Banking & Capital Markets Leader
Transaction Advisory Services
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