About 44% of surveyed dealmakers expect M&A to increase in 2017.
- High Hopes for M&A Driven by Promise of Corporate Tax Reform
- Buoyant Equity Markets, Friendlier Regulatory Environment Seen as Key Drivers of Deal Activity
- Results Announced to Coincide with Annual Tulane Law School M&A Conference
NEW ORLEANS - Encouraged by hopes of a cooperative Trump presidency and underpinned by favorable capital market conditions, leading dealmakers expect an increase in global M&A levels in 2017, according to the 10th Annual Brunswick M&A Survey. About 44% of surveyed dealmakers expect M&A to increase in 2017, an uptick from the previous year in which only 13% of respondents were optimistic on M&A.
The survey polled 120 top M&A practitioners and observers. Results were released ahead of the Tulane University Law School 29th Annual Corporate Law Institute, an annual gathering of the M&A community that draws lawyers, bankers, Delaware judges and other market participants. Last year, dealmakers selected then-candidate Donald J. Trump as the presidential candidate most beneficial to dealmaking and corporate interests.
“There’s a lot of optimism about a Trump administration in the deal community,” said Steven Lipin, U.S. Senior Partner, Brunswick Group. “Promises of tax reform and cash repatriation could free up balance sheets and empower companies to pursue more deals. On the other hand, a new set of considerations will be top of mind for CEOs and boards looking at M&A, such as commitments to investing in the U.S. and impact on jobs.”
Notable Highlights from 2017 M&A Survey
- Trump a Boon for M&A: Most dealmakers (50%) believe the overall impact of the Trump administration to be positive for M&A, while fewer respondents (29%) see the presidency as a setback. Among the anticipated changes under the new administration, over half of respondents see corporate tax reform (58%), antitrust policies (52%) and repatriation of offshore cash (51%) as the top three drivers impacting M&A. However, most dealmakers (61%) don’t expect meaningful corporate tax reform to be implemented until 2018.
- Antitrust Concerns Subside: As the new administration fills key slots in the Justice Department and FTC, the majority of respondents in the U.S. (71%) believe that antitrust scrutiny will decrease in 2017.
- Roadblocks for International Deals: Foreign companies looking to enter the U.S. may be asked to turn around; 72% of dealmakers expect the level of CFIUS (Committee on Foreign Investment in the U.S.) scrutiny to increase. Likewise, most survey respondents (70%) believe domestic deals will drive the U.S. M&A market, as opposed to cross-border activity, a departure from previous years.
- Investing in America:While the new administration may be friendlier to dealmaking and corporate interests in general, many expect some strings to be attached. Commitments to investing in the U.S. (68%) and job creation (60%) were the most cited considerations when pursuing an M&A deal under President Trump. Similarly, 56% of respondents believe that domestic investment would be required by the administration in exchange for overseas cash repatriation. Dealmakers see about as much of the potential excess cash going toward share buybacks (78%) as to M&A (76%).
- Several Sectors Ripe for Consolidation: When asked which sectors were likely to see the most deal activity in 2017, respondents led with healthcare services and providers (38%), followed by energy (37%), pharmaceuticals/biotechnology (36%), consumer goods / retail (35%), and technology hardware / software (33%). Sectors anticipated to have the least M&A activity include automotive / transportation (10%), utilities (8%), and telecoms (5%).
- Activists Maintaining their Influence: Just over half of U.S. respondents (52%) believe shareholder activism levels will remain steady in 2017, and companies are more likely expected to settle (58%) than fight (42%) with an activist. Operational / performance improvements (27%) and returning capital to shareholders (21%) are predicted to be the most recurring demands from activists.
The 2017 Brunswick M&A Survey included the views of 120 leading M&A lawyers, bankers, advisors and financial reporters from Brunswick’s proprietary database of M&A practitioners across North America, Europe and Asia, and was conducted from February 27 to March 12, 2017. The results were analyzed by Brunswick Insight, the firm’s specialist opinion research and consulting practice, which focuses on understanding the views of opinion formers around the world. The survey results can be found on the Brunswick Group website at bit.ly/MA_info17.