A higher deal count will drive continued strength of global mergers and acquisitions (M&A), according to JPMorgan’s 2016 M&A Global Outlook. Whereas 2015 saw record M&A owing to the sheer size of transactions, this year is forecast to see a rise in volumes owing to an increased number of deals.

The report noted that the successful transactions of the past year could create a 'domino effect', leading to increased M&A activity by previously inactive corporates seeking to replicate this success in 2016. In the fourth quarter of 2015, executives were sitting on $6000bn in accumulated cash reserves globally, which means companies are now armed with substantial cash to pursue acquisitions and growth in the year ahead. Private equity funds offering substantial available equity are predicted to increase their activity and play a greater role in M&A activity. Commodities-related sectors and financial institutions may also witness a rebound in activity in 2016. 

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Crossborder transactions are expected to increase, said the report. This is taking place as corporations pursue external growth and expand into new geographies, increasingly outside of the US and into the Middle East, Africa and Japan. The sectors leading the way for transactions are most likely to be healthcare, telecommunications, media and technology. 

The report highlighted the role of Asian outbound M&A in keeping up the pace of transactions globally, noting that Asia’s contribution “will remain significant as the region's businesses look West for new sources of growth and value-added products and services for a rising middle class”. Asia’s strong level of activity is likely to continue. Meanwhile, despite continued sluggish growth, Europe may attract more inbound M&A activity as prospects for growth across the Continent improve. “There is better visibility around the return of growth to the [European] region that may not be fully reflected in market prices,” the report noted. 

The 2016 M&A Global Outlook report has pinpointed a handful of key trends to look out for – bullishness on the part of corporates equipped with large cash reserves, increased activity by private equity investors, an appetite for new geographies and crossborder transactions, and a continued supportive deal environment. These supportive factors enabled M&A in 2015 to reach its highest levels. Smaller transactions in new sectors may drive the momentum for deals in 2016.