The Intralinks Deal Flow Predictor, a predictor of future mergers and acquisitions activity, sees future growth in activity over the next six months with M&A volumes in Q1 2015 up 10 to 14 percent year-over-year.
The Q1 2015 Intralinks Deal Flow Predictor (“DFP”) points to sustained momentum in M&A activity that will carry into 2015. With this latest DFP report, Intralinks is also continuing to predict that global announced M&A volumes for the full year of 2014 will rise between 7 and 11 percent compared to 2013, which would represent the first annual increase in the number of announced M&A deals since 2010.
“The combination of increasing competition among buyers along with corporates actively looking for new opportunities is driving increased activity,” said Matt Porzio, vice president of M&A strategy and product marketing at Intralinks. “Sellers are motivated and buyers have access to financing, enabling them to grow. Deal volume continues to go up and we expect to see a good number of high profile deal announcements through early 2015, especially in sectors like TMT (Technology, Media, and Telecomm), industrials and consumer.”
“This is the best M&A environment in the U.S. since 2006-2007,” said Joshua Rosenbaum, Managing Director at RBC Capital Markets. “The U.S. economy is gathering strength while credit and equity markets remain vibrant. Heading into 2015, the fundamental driver for global M&A – the need for buyers and sellers to deliver shareholder value – promises to remain in place.”
The Q1 2015 DFP report suggests that we will see a five percent quarter-on-quarter (QoQ) decrease and an eight percent year-on-year (YoY) increase in early-stage global M&A activity in Q1 2015, with particularly strong performances in North America and Asia Pacific.
Other highlights from the latest DFP include:
- North America
North American early-stage M&A activity is up 19 percent over the last four quarters, up 14 percent YoY and down six percent QoQ, underpinned by continuing strength in the economy, low interest rates, and increased pressure on corporate buyers to generate growth.
- Asia Pacific
Early-stage M&A activity levels in Asia Pacific are showing a consistent increase, up 7 percent over the last four quarters, 7 percent YoY and 18 percent QoQ. The jump in QoQ activity was seen across almost the entire APAC region with the exceptions of Australia and Hong Kong. Leading the pick-up in activity were South Korea, Singapore, India and Japan.
Europe continues to perform strongly and consistently. Early-stage M&A activity was up 16 percent over the last four quarters, up eight percent YoY and down nine percent QoQ. Germany continues to be a major driver of M&A activity in the region. Intralinks is seeing a strong rebound in France, Italy, and Spain as their economic recoveries gather pace.
- Latin America
Latin America is still showing weakness. The DFP shows a 10 percent decline in early-stage M&A activity over the last four quarters, a 22 percent YoY decline and an 11 percent QoQ decline. Brazil, the region’s largest economy, is stagnating as weakening demand and investment have coincided with a decline in the commodity price cycle for key exports such as iron ore, which fuelled Chinese industrialization and previously helped Brazil to achieve historical growth rates of 4-6 percent per annum, forecast to fall to only 1.3 percent for 2014.
The Intralinks DFP tracks early-stage M&A deals (sell-side M&A transactions that are in the preparation stage or that have reached the due diligence stage) across the world, on average 6 months prior to their public announcement. Intralinks has been a global provider of virtual data rooms for over 17 years, and is involved in the early stages of a significant percentage of the world’s M&A deals. Because of this, the Intralinks DFP has been independently verified as an accurate predictor of future changes in the global number of announced M&A transactions, with quarter-on-quarter (QoQ) percentage changes in the Intralinks DFP being reflected six months later in announced deal volumes, as reported by Thomson Reuters.
Intralinks provides products and services, including virtual data rooms, that are used by M&A professionals to manage the full lifecycle of mergers, acquisitions, divestitures, capital raises and corporate restructurings. The company is headquartered in New York (www.intralinks.com).
2014 PEPD • Private Equity’s Leading News Magazine • 10-21-14