The APAC region is forecast to lead the growth in global M&A announcements in Q1 2018, according to the latest edition of the Intralinks Deal Flow Predictor report.
In APAC, according to our data, early-stage M&A activity in Q3 2017 increased by 26 percent year-over-year (YOY). At the same time, according to data from Thomson Reuters and Intralinks’ own analysis, the number of announced M&A deals in APAC in Q3 2017 rose by 12 percent YOY. Based on this data, our independently verified predictive model forecasts that the number of announced M&A deals in APAC in Q1 2018 is expected to increase by around 14 percent YOY.
All regions within APAC are showing increasing volumes of early-stage M&A activity, with Southeast Asia, India and North Asia (China, Hong Kong and South Korea) making the strongest contributions to APAC’s growth. Japan recorded its first quarter of increasing early-stage M&A activity since Q4 2016, with the number of early-stage deals rising by 6 percent YOY. Despite political instability on the Korean peninsula and in Myanmar, for most of the APAC region, strengthening global economic demand and supportive fiscal and monetary policy actions are driving vigorous economic growth and increasing dealmaking confidence.
Based on our insights into early-stage M&A activity, the real estate, materials and consumer & retail sectors are predicted to lead the growth in APAC M&A announcements over the next six months.
Worldwide, early-stage M&A activity in Q3 2017 increased by 5 percent YOY. At the same time, according to data from Thomson Reuters and Intralinks’ own analysis, the number of worldwide M&A deals that were announced in Q3 2017 increased by a healthy 12 percent YOY. Based on these data points, our predictive model is forecasting that the number of worldwide announced M&A deals in Q1 2018 is expected to increase by up to 6 percent compared to Q1 2017.
Globally, the dealmaking environment continues to be supported by a combination of a gradual pickup in global economic growth, subdued inflation in advanced and emerging economies, buoyant asset markets and historically low interest rates. The risks to the scenario of steadily increasing M&A activity are twofold: political and financial. Increases in economic nationalism, protectionism and restrictions on global trade and cross-border economic integration (e.g. Brexit and the North American Free Trade Agreement negotiations) all have the potential to negatively affect dealmaking sentiment. With global equity markets at record highs, and almost nine years since the last major trough, a correction that turns into a more serious sell-off could also prove negative for dealmaking confidence.
M&A markets in 2018 will be impacted by new data privacy regulations, such as the European Union’s General Data Protection Regulation (GDPR), as well as by an increasing focus on cybersecurity due diligence. Dealmakers, especially legal professionals, will also need to get used to changes in deal preparation and due diligence brought about by the increasing use of artificial intelligence and machine learning tools in M&A – read about these emerging trends in this and previous editions of the Intralinks Deal Flow Predictor report.
To get more regional and sector insights, and to know the future of global M&A six months ahead of everybody else, download your copy of the Intralinks Deal Flow Predictor here.