M&A and the Presidential Election
There are few things the M&A market likes less than political uncertainty and, following the results of the EU referendum and Brexit shaking up global markets, there is more to come in the form of the upcoming presidential elections in the US.
On Tuesday 8 November 2016, Americans will go to the polls to elect the country’s 45th president, with the choice between the assumed nominees, Democratic candidate, Hillary Clinton, and the Republican candidate, Donald Trump. As of mid-July, the polls have Mrs Clinton ahead in the race to the White House, on 52.8 per cent, while Mr Trump has 46.5 per cent, indicating the close nature of opinion among voters. However, given the erratic and inaccurate nature of the polls during the run-up to the UK’s EU referendum, which has had significant economic and political fallout after the decision to leave, the degree of uncertainty around this presidential election means that confidence levels in the pollsters is low.
The decision taken by the American people will also have repercussions on the M&A markets. A recent survey by Intralinks Global has indicated that among 1,500 M&A dealmakers from Europe, the Middle East, Africa, Asia Pacific and Latin America, in answer to the question, “How do you believe Donald J Trump’s presidency would affect M&A in your region?” more than 70 per cent of them answered that it would have a negative impact.
However, M&A activity typically begins to slow during the summer months, and historically, during years when there is no incumbent, a slowdown is felt after Labor Day (the first Monday of September) and on into the October before a presidential election. This is because investors wait to see who will be the running the new administration and, therefore, influencing a wide range of policies such as anti-trust, telecoms and monetary policies. The volatile nature of this year’s election may well have some influence on M&A activity and cause some investors to pause and consider the political and financial environment before they decide whether to invest their money. CEOs appear to be reluctant to take risks at the moment as they are unsure as to the environment they will be operating in.
In terms of global M&A sentiment, the market has seen a slight upturn in the second quarter of 2016, with a strong dollar keeping the USA in particular optimism. Sectors which have had the most activity include healthcare, industrials, energy and power. In Asia Pacific and Europe, M&A activity grew by 9.7 per cent during quarter one of 2016, while the Middle East and Africa saw growth of 7.5 per cent at the same time. So while it is true that the presidential election may produce a short-term disorientation of M&A activity, which may lead to negative market predictions, there are still sectors performing well and the outlook for M&A globally is positive.
With experience in a number of key sectors and representation throughout the Americas, Europe, Africa and Asia, Benchmark International can connect you with the right opportunity. To find out more, visit http://www.benchmarkcorporate.com.