European M&A deals in the first half of 2012 totalled US$356.1bn – a 15.7% drop from the same period in 2011. Despite this, several sectors including construction, transport, media and energy, mining & utilities all saw an increase on H1 2011. Emerging Markets continue to show growth, having made over 4,000 acquisitions worth over $450 billion since 2005. During this period, Indian companies have proven the most acquisitive with over 800 deals, while Chinese companies spent the most with over $75 billion in investment outflows..
EMEA M&A markets will continue to be influenced by bank rescue plans, asset divestments and Eurozone worries with foreign exits becoming more visible – especially in heavily hit Eurozone countries as Governments attempt to re-capitalise. There are signs that even if the Eurozone survives in its present state, companies will have to plan for a different market environment including fiscal austerity, structural change and increasing consolidation.
The latest Deloitte CFO Survey indicates that corporate risk appetite has risen at the fastest rate in five years, however this is coupled with a focus on defensive strategies and there is an apparent gap between the need for growth and still cautious M&A strategies.
Upfront: Doing the right deal
Even though caution remains the prevailing sentiment the conditions for dealmaking are fertile. Companies and other investors are sitting on historically high levels of cash reserves and have solid balance sheets while interest rates continue to be low. In conditions where even modest organic growth is hard to achieve, the corporate sector must consider inorganic growth opportunities, otherwise they risk squandering their hard won positions.
In this publication we share our insights on some of the key themes we believe will influence M&A activity in the future:
We are also delighted to include perspectives from leading global figures on their views and experiences with M&A in the current environment, including George Roberts, Co-Founder & Co-CEO of Kohlberg Kravis Roberts (KKR), Liang Xinjun, CEO of Fosun International and David Smoot, CEO of Dubai International Capital.
At Deloitte we provide a network for individuals responsible for merger & acquisition activity. The M&A circle brings together a blend of networking opportunities, technical training and regular commentary which provide insights and updates to market risks and opportunities. Contact email@example.com.