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M&A faces a global confidence crisis

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New Australian M&A deals commencing dropped 34% last quarter compared to the previous, indicating that 2019 might not end up being the stellar deal year some have suggested.

KPMG’s Evolving Deals Landscape 2018 survey showed unprecedented optimism for the year ahead, with 93% of respondents predicting an increase in M&A in 2019, showing that companies still viewed M&A as viable growth strategy.

“Corporates with confidence are being more aggressive in building M&A capability to make sure they are ready to pounce on opportunistic assets,” says Nick Harridge, Partner, ENR Transaction Services, KPMG.

 

Pessimism rising among CEOs

However, the vast majority of corporates are doubting themselves already. According to PwC’s 22nd annual CEO outlook survey, pessimism among global CEOs has risen dramatically, with nearly a third of business leaders believing that economic growth will decline over the course of 2019 – six times as many as recorded in last year’s survey.

“From our perspective the downturn in M&A activity observed in the quarter largely reflects seasonality. In the Australian market there is fairly regular drive to complete deals either by end of Dec for the Calendar year close or July for the financial year close,” said Neil Bourne, Managing Principal at Eaton Square.

“We anticipate that the market for M&A will remain active into FY19 but are also mindful that changes in the international trade relationship environment have the potential to dampen enthusiasm for cross-border transactions,” said Bourne.

 

Get back your confidence

In this climate of pessimism and uncertainty, successful outcomes can be few and far between. Readiness and a clear path forward have never been more essential for dealmakers and business leaders to be confident in their strategies.

 

For a full picture of emerging market trends, download the full Indicators report here.

Download the latest Indicators report

 

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