While economic headwinds have buffeted the markets in Q1 2016, the majority of businesses are still looking to pursue international deals. According to Herbert Smith Freehills’ new M&A report Beyond Borders, 86% of respondents are looking to do at least one deal. Out of those, 88% say at least one deal will be cross-border and 41% expect to do multiple cross-border deals.
Despite market volatility, the survey reveals that corporates see M&A as the priority route to growth. When it comes to the main facilitators for those deals, the ease with which businesses are able to raise funds is the single most important factor. More than half the respondents (53%) identified this, though other factors are also important – notably industry consolidation (39%).
However, it is unlikely that deals will be spread evenly across all sectors. M&A spikes are often found in particular industries and this is likely to continue into 2016. “In the pharmaceutical industry, there was a rush to do inversion deals, in part because of the reduction of the tax burdens which US companies could achieve,” says Stephen Wilkinson, global head of M&A at Herbert Smith Freehills in London. “More recently, we’ve seen industry consolidation and the move towards quad play as a strategic driver of deals in the telecommunications, media and technology (TMT) space in Europe.”
Interestingly, given the appetite for distressed assets, the energy and mining sector could see a hike in M&A volume after a lukewarm 2015, particularly if prices stabilise.