Global M&A Activity to Reach Record Figure of £2.4 Trillion in 2018

Worldwide mergers and acquisition activity will hit £2.4 trillion ($3.2 trillion) next year, as deal-making is elevated on an increasing global economic tide, according to recent forecasts.

Investors are feeling “increasingly confident” due to a spike in global trade and GDP development across most of the world, according to research by law firm Baker McKenzie and consultants Oxford Economics.

2018 will mark a “cyclical peak” for numerous macroeconomic and financial deal drivers, pushing a substantial rise from the £2 trillion total M&A activity predicted for 2017.

The report also estimates a solid pipeline for initial public offerings (IPOs), with a hike from £143bn in 2017 to a cyclical peak of £221bn next year, which is close to record highs.

However, this figure could rise substantially if Saudi Aramco goes ahead on its intention to list. Possible proceeds from a flotation of the state-owned oil juggernaut aren’t included in the Baker McKenzie predictions owing to uncertainties over the timing and size of the listing.

That figure could rise significantly higher if Saudi Aramco follows through on a plan to list. Potential proceeds from a flotation of the state-owned oil giant are not included in the Baker McKenzie forecasts owing to doubts over the timing and scale of the listing.

According to Tim Gee, corporate partner at Baker McKenzie (London office), the UK will witness a “significant increase in domestic and inbound activity in 2018”.

Separate information from accountants EY display a noticeably increased appetite for cross-border M&A in the UK.

Baker McKenzie’s forecasts show a 60% year-on-year growth in M&A deal value in 2018, before dropping back to 27% lower than 2017 by 2020, as the UK makes it exit from the EU.

UK inbound activity has been handed a boost by the weakening of sterling, which has made businesses more appealing for foreign investors, yet uncertainties over the shape of future trade relationships have triggered some caution from companies.

Baker McKenzie’s global chair, Paul Rawlinson, said: “After a few soft patches in 2017 we have a more optimistic outlook for the global economy and deal-making in 2018, as long as the brakes are not put on any further on global free trade.

“We see an uplift in both M&A and IPO activity as deal-makers and investors gain greater confidence in the business prospects of acquisition targets and newly listed businesses.”

Global M&A bottom

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