The top six risks to global M&A in 2016

The top six risks to global M&A in 2016

New survey reveals the key factors which could hold back cross-border M&A in the next 12 months

Respondents to the new Herbert Smith Freehills’ cross-border M&A report Beyond Borders have given their verdict on the six key factors that could negatively impact ambitions for M&A over the next year. The top six fears identified by respondents are:

  1. Instability in the Eurozone. This is the worry our respondents see as most likely to dampen their dealmaking enthusiasm over the next 12 months; it was cited as the number one risk by 25% of respondents.
  2. Impact of slowdown in Chinese demand. China's falling growth figures loom large for many businesses, with 20% warning that it could have a significant impact on their enthusiasm for dealmaking.
  3. Low commodity price environment. This risk factor, which is related to slowing growth in China, is seen as a significant risk by 17% of respondents.
  4. Ukraine. The ongoing military confrontation on the fringes of Europe has the potential to become a deal-threatening risk for 10% of respondents.
  5. Impact of tightening US monetary policy. 9% of respondents cited nervousness about US monetary policy as their key fear. This fear may recede, for this year at least, in light of the latest signals from the US Treasury.
  6. Rising tensions in the South China Seas. The global nature of political confrontation is further underlined by the fact that 7% of respondents are particularly concerned about this potential conflict.

Interestingly only 6% of global respondents cited Brexit as a significant worry.

Contact our experts

Stephen Wilkinson
Global Head of M&A
Tel: +44 20 7466 2038

Roddy Martin
M&A Partner (UK/US)
Tel: +44 20 7466 2255

Nicola Yeomans
M&A Partner (Asia)
Tel: +65 68688007

Andrew Rich
M&A Partner (Australia)
Tel: +61 2 9225 5707

Frédéric Bouvet
M&A Partner (EMEA)
Tel: +33 1 53 57 70 76

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After a record-breaking year for M&A last year, the start of 2016 has been more uncertain with the slowdown in the Chinese economy, depressed commodity prices and falling stock markets coupled with Eurozone instability all causing uncertainty in the global economy. However, despite these uncertainties, our two separate surveys, conducted in late 2015 and updated in 2016, demonstrate that the short to medium-term outlook for M&A as a priority focus for capital allocation by corporates remains extremely robust.

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