Intralinks predicts global announced M&A volumes in Q1 2015 will be up 10-14 percent year-over-year
Intralinks® (NYSE: IL) announced today the release of the Intralinks Deal Flow Predictor (DFP), a unique predictor of future mergers and acquisitions (M&A) activity. Intralinks is also detailing results from a separate GlobalSentiment Survey it conducted that gauged opinions among M&A professionals on the future deal environment. Together, these provide unique insights into global M&A deal volumes and market trends through Q1 2015.
The Intralinks DFP forecasts changes in the volume of global M&A deals that are expected to be announced in the next six months. 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.
The Q1 2015 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 seven 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 atIntralinks. “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 Telecoms), industrials and consumer.”
“This is the best M&A environment in the U.S. since 2006-2007,” said Joshua Rosenbaum, co-author of “Investment Banking: Valuation, Leveraged Buyouts and Mergers & Acquisitions,” and 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.”
Intralinks DFP Highlights – Outlook for Q1 2015
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 the leading 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. Highlights from the latest Intralinks DFP include:
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.
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. We are seeing a strong rebound in France, Italy, and Spain as their economic recoveries gather pace.
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.
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.
Global Sentiment Survey
In September 2014, Intralinks conducted a survey of 700 global M&A professionals to gauge dealmakers’ sentiments and views on the M&A market. The survey’s results show that dealmakers remain positive, although their optimism is lower than in the previous quarter. They expect energy and power and technology to be the two most active sectors over the next six months and still see deal valuation as the most difficult part of M&A transactions.
Highlights of the survey results include:
- 60 percentof M&A professionals are optimistic about the deal environment in the next six months, compared to 66 percent for the previous quarter
- 69 percentexpect deals volumes to increase over the next six months, compared to 77 percent the previous quarter
- 54 percentsay that recent technology deals and technology valuations are signs of a tech bubble
- 62 percentbelieve that tax inversions (where companies buy foreign firms to lower overall corporate tax rates) are partially driving M&A activity
- 60 percent believe that international government action to retain tax revenues will make cross-border M&A transactions harder to close
About Intralinks Dealspace™
Intralinks is a leading supplier of solutions for managing strategic transactions. Intralinks Dealspace, the market leading virtual data room (VDR), gives M&A professionals a complete solution to manage the full lifecycle of a deal.Intralinks Dealspace supports every step of the deal process, enabling deal teams to securely exchange data with buyers, sellers and advisors, helping speed strategic transactions such as mergers, acquisitions, divestitures, capital raises and corporate restructurings.
About the Intralinks Deal Flow Predictor
The Intralinks Deal Flow Predictor provides Intralinks’ perspective on the level of M&A due diligence activity taking place during any given period of time. The statistics contained in the Intralinks DFP represent the volume of VDRs opened, or proposed to be opened, through Intralinks or other providers for the purpose of conducting due diligence on proposed transactions including asset sales, divestitures, private placements, financings, capital raises, joint ventures and partnerships. These statistics are not adjusted for changes in Intralinks’ share of the VDR market or changes in market demand for VDR services. These statistics may not correlate to the volume of completed transactions that may be reported by market data providers and should not be construed to represent the volume of transactions that will ultimately be consummated during any period of time. Indications of future completed deal activity derived from the DFP are based on assumed rates of deals going from due diligence stage to completion. In addition, the statistics reported by market data providers may be compiled with a different set of transaction types than those set forth above.
For more information about the Intralinks DFP, please visit our website.