Industry experts reported cautious optimism relating to mergers and acquisitions (M&A) in 2015 at the fifth annual Outlook for M&A event organised by the M&A Research Centre (MARC) and held at Cass Business School, City University London, in February. Experts also discussed the M&A revival in 2014, prospects for 2015 and crossborder deals.
“Last year was an absolutely stellar year. Huge deals started coming back. It is great having steady deal volumes in the middle market but it is really the deals in the mega market that make the industry come alive again,” said Hamilton Matthews, CEO of MergerMarket, an M&A news service. He also said that healthy equity markets, cheap debt and corporate desire to use unspent cash piles fueled the increase in M&A activities.
“During the past couple of years some of the drivers of deals have been cheap debt and board confidence,” said Ian Bagshaw, a partner at global law firm White & Case. However, he said that currency fluctuations, oil price changes or geopolitical issues could have a negative impact on the drivers.
Maddy McTernan, head of UK M&A at Swiss lender Credit Suisse, described a flat year for M&A activity in the UK despite the fact that it was a good deal year overall. “If you take the UK, volumes were actually flat and the big deals that everyone was talking about were the ones that actually didn’t end up happening – Pfizer and AstraZeneca couldn’t agree terms and the AbbVie Shire deal was withdrawn,” he said. Mr McTerner also said that the regulatory framework for takeovers in the country would effect investors’ decisions in 2015.
Experts forecasted that there is not going to be a specific region attracting the majority of M&A deals. The deal makers would show preference to crossborder transactions, in an attempt to enter developing markets, implement successful concepts from one country into others or by purchasing deals in the technology sector.
Sectors such as pharmaceuticals, consumer and technology, media and telecommunications industries as well as oil and gas are set to see the most activity. Michel Driessen, a partner at law firm Ernst & Young, commented that private equity investors would be keen on oil and gas deals, with special interest in energy infrastructure.
“A number of companies in the oil industry will suddenly have become targets or they will have to focus on their core business and sell off the periphery, just as financial services companies did in the financial crisis,” said Steve Allan, Towers Watson’s practice leader for Europe, the Middle East and African M&A.