According to the latest Intralinks Deal Flow Predictor report, early-stage M&A activity in Q3 2017 increased by 30 percent year-over-year (YOY) in the Latin America (LATAM) region. At the same time, according to data from Thomson Reuters and Intralinks’ own analysis, the number of announced M&A deals in LATAM in Q3 2017 rose by 3 percent YOY. Based on this data, our independently verified predictive model forecasts that the number of announced M&A deals in LATAM in Q1 2018 is expected to increase by up to 5 percent YOY.
Q3 2017 marks the fourth consecutive quarter of increasing early-stage M&A activity in LATAM, confirming the region’s return to growth. According to the International Monetary Fund’s latest World Economic Outlook report , LATAM’s economic activity rebounded in 2017 and is forecast to rise steadily over the next two years, driven by increasing consumption in Brazil and Colombia, economic and monetary reforms in Argentina and energy-sector liberalization in Mexico. These should all prove positive supports for dealmaking activity.
Based on our insights into early-stage M&A activity, the healthcare, technology, media & telecoms and financials sectors in Mexico, Peru and Brazil are predicted to lead the growth in LATAM 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.