This snapshot of Willis Towers Watson's most recent deal analysis, in collaboration with the Cass Business School in London, looks at the performance of corporate M&A deal makers in 2015 globally. It also identifies some key M&A trends and patterns anticipated for 2016, including:
- Global economic volatility and politics will be a key factor
A dominating theme driving M&A activity will be political and economic instability. A number of events could combine to have global significance such as further US interest rate rises, the US election, a potential Brexit, European political uncertainty and Chinese market volatility among others. Any combination of these events could create winds of change, but whether they promote or depress activity will depend on if and how they coincide.
- Mega-deals will continue but may mask a gradual slow-down in activity
Pharmaceutical company’s M&A activity should continue unabated and could continue to drive mega deals activity in 2016. While deal volume in monetary terms will remain high as we go into 2016 it will be interesting to see if a drop in the number of smaller deals emerges as a leading indicator that we are reaching the peak of the M&A cycle.
- Cross-sector deals will continue to grow
Cross-sector and 'transformational' deals have long been regarded as harder to complete, and harder to realise value from, given the complications of integrating diverse business models and organisational cultures. 2015 saw a record number of these deals, both in number and as a proportion of all deals. We can anticipate this continuing into 2016.
- Weak commodity prices to continue to create opportunities in the extractive and oil & gas sectors
As commodity prices remain weak, the extraction and oil & gas sectors will be looking to rationalise and to create new income streams. Despite the turmoil in these sectors during 2015 successful acquirers outperformed their industry indices, and we expect to see more intra-sector deals in these areas as stronger players look to make the most of the opportunities that present themselves.