Megadeals could see biggest M&A boom since financial crisis
Updated : 12:49
The value of global mergers and acquisitions in the first half of the year was the highest level since before the financial crisis of 2007, with 2018 potentially on course for a record year.
Deals have reached $2.12trn so far in 2018, according to a study by Linklaters, with the average of an M&A agreement reaching $1.07bn, boosted by deals such Disney's $71.3bn purchase of Rupert Murdoch’s media empire.
“In the immediate aftermath of the global financial crisis, a lot of activity was driven by banks and other corporates divesting and shoring up the balance sheets," said Fionnghuala Griggs of Linklaters.
“We’ve come through that period to a place of renewed confidence in the markets. If deal volumes continue at their current level, we could see 2018 turning out to be a record year.”
The global value of M&A deals topped $3trn in both 2006 and 2007 before falling to less than half that amount in 2009, then rising to around $2trn in each year from 2010 to 2013. Since 2013, the annual value has been more than $3trn each year.
Asian companies are responsible for an increasing slice of global M&A activity, boosted by the £46bn takeover of Shire by Takeda. Asian firms were involved in 35% of M&A deals this year, up from 23% in 2008.
Recently data compiled by Bloomberg showed that India is experiencing its biggest M&As boom in history which has reached a $104,5bn total in 2018.
US companies were slightly behind, involved in 34% of M&A this year, up from 27% in 2008, while European and UK companies saw their involvement sink to 25% from 39% ten years ago.
Linklaters said geopolitical issues, such as the protectionist measures being sought by Washington in recent months, Brexit and the record $177trn of global debt could lead to companies not being able to afford acquisitions and these record high figures to drop.
“There are challenges on the horizon," said Grigg. "So, whilst we may have come through a decade of significant change and upheaval, this isn’t the new normal. There are events just around the corner that could quite quickly reshape everything.”