• Survey of deal making professionals reveals a broadly bullish prospect for M&A activity during 2018.
• More than three-quarters (77%) of investment banking and law firm respondents expect M&A and equity capital markets to increase by more than 5% during 2018.
• More than a fifth (21%) expect M&A to increase by more than 25%.

Thomson Reuters has announced the findings of a Deal Makers Sentiment Survey:‘Great Expectations for 2018’, providing a broad and deep quantitative assessment of M&A-related and Capital Markets activity in the year ahead across all major sectors and geographies.

Key findings from the survey show more than three-quarters (77%) of investment banking and law firm respondents expect M&A to increase by more than 5% during 2018. More than a fifth (21%) expect M&A to increase by more than 25%.

The report is based on a survey of 275 M&A and capital markets professionals and business executives across 48 countries, conducted by Thomson Reuters in-house researchers between November 2017 and January 2018.

Thomson Reuters asked the survey respondents about the potential drivers behind future M&A activity, with 47% of corporate respondents referring to acquiring ‘undervalued assets’ as a top M&A objective, followed by acquiring ‘high-growth businesses’ and ‘achieving economies of scale.’

Regulatory compliance was cited as an additional motivation for M&A activity, particularly in Europe, where more than half (51%) of European respondents saw this as a driver of industry consolidation, compared to just 22% of Americans. Technology remains an attractive sector for M&A, with 75% of law/bank deal makers citing it as ‘compelling’ or ‘very compelling’.

“Many companies are in good health, with expectations of steadily rising revenues, capital expenditures and employment ” says Matthew Toole, director of Deals Intelligence at Thomson Reuters. “Rather than sit on cash, the widely shared expectation is for companies to deploy capital on strategic acquisitions, a trend we’ve seen so far in 2018 with double-digit percentage gains for deal making across all regions.”

“This means that investment banks, law firms, hedge funds, educational institutions and corporations will likely need to monitor and report on transaction activity, perform market share analysis, and identify new business and investment opportunities. In such a fiercely competitive market, companies are also looking for sector expertise in their advisors, which coincides with a long running increase in the share of M&A fees taken by boutique advisory firms.”