Welcome to the fifth edition of the CMS European M&A Outlook, published in association with Mergermarket.
What a difference a year makes. When we conducted our 2016 survey, respondents were still in shock following the UK’s vote to leave the European Union (EU) and the impending US presidential election was weighing on their minds. Most were very uncertain about the future prospects for Europe and its economies and had mostly placed their M&A plans on hold.
The mood among dealmakers is markedly different in 2017. While acknowledging some of the challenges they face, respondents are largely optimistic about dealmaking prospects for the coming year, with many suggesting they are ready to take advantage of opportunities stemming from dislocations that result from Brexit and from a return to economic growth in the eurozone.
Our survey provides key insights into how both corporate and private equity (PE) firms are adapting their M&A strategies to a new European landscape, and how they are looking beyond the continent to tap into new geographic, product and customer markets.
Key findings from our research include:
- M&A set to rise. Over two-thirds of respondents are expecting M&A in Europe to increase over the coming year, with the overwhelming majority (90%) suggesting that non-European buyers will be active acquirers across the continent. Deals will be driven by the need to diversify away from existing markets to manage volatility, take advantage of Europe’s relatively lower valuations and access the EU’s large market.
- Transformational deals on the cards. In line with the rise of larger, €1bn+, deals seen in the first half of 2017, two-fifths of corporates and nearly half of PE firms are seeking out large, transformational deals over the next year. This is partly in response to rapid technological change, with the vast majority of respondents saying that technology and IP are among the top two aspects under consideration when acquiring.
- Favourable financing conditions. European companies now benefit from a range of financing options for their deals, from newly-emerging private credit funds that can provide an alternative or addition to bank finance, to more traditional private equity. Respondents are highly positive about the prospects for raising capital over the coming year, with 88% expecting similar or more favourable financing conditions.
We hope you will find the European M&A Outlook report both interesting and complementary to our annual CMS European M&A Study, the next edition of which will be published in spring 2018. If you would like any additional hard copies of the M&A Outlook, or any further information about our services, please contact our Corporate/M&A team ([email protected]).