M&A deal values for the first three-quarters of 2014 are up more than half (51%) on the same period in 2013, according to new research.
Law firm Allen & Overy's latest M&A Index also found that the value of cross-border transactions is higher than at any time since 2007, with US companies leading the charge, followed by growing activity from Canadian, Chinese, German and UK strategic investors.
Overall, M&A markets have staged a strong recovery in 2014, with deal values in the first three-quarters of the year already higher than for the same period in 2013, and average deal sizes at their highest levels for many years.
Activity is fuelled by low interest rates and large cash reserves on corporate balance sheets, although Allen & Overy noted that the “equity markets are currently undergoing some unhelpful volatility”.
Commenting on the index, Andrew Ballheimer, Allen & Overy's global co-head of corporate, said: “CEO confidence is certainly back. It is apparent in the size of transactions, with 70 deals worth more than $5bn compared to 52 this time last year.
“But, more importantly, it is evident in the scope of, and ambition of, transactions. There have been a number of highly strategic deals that have been significant enough to transform companies and, in some cases, entire sectors. This consolidation, which has defined the landscapes of several sectors, has driven companies to reassess their strategies. CEOs are acting, while market conditions are favourable, rather than risking being left on the sidelines.”
Traditionally, the third quarter is quieter, but transactions have continued at a healthy pace over the summer and the deal pipeline is strong enough to suggest the recovery will continue through the winter and into 2015.
Telecommunications, media and technology is the leader by deal value, followed by life sciences.
Sally Percy is editor of The Treasurer