White & Case – After a slow start and several challenges, American M&A thrived as the year closed — 2017 could be explosive for dealmaking.
M&A accelerates into 2017 –
Despite political uncertainty and subdued activity early in 2016, the US M&A market closed the year with a flourish. 2017 looks to be strong.
After a slow start to 2016, US M&A activity recovered in the last quarter to close the year robustly. In the fourth quarter alone, US$483.6 billion worth of US M&A was announced, making it the highest quarterly total of the year. As a whole, H2 2016 value outstripped H1 value by 52 percent. Setting aside the blockbuster years of 2014 and 2015, 2016 ended up being one of the best for M&A since 2007. Confidence is high that 2017 will be another good year (and maybe even a great year) for dealmaking.
Donald Trump’s election as US President has ushered in a pro-business agenda that is positive for M&A. Brexit has not impacted as much as people expected, and China’s interest in M&A targets and ability to compete for those targets, on a global basis, is not likely to wane even in the face of potential capital, regulatory and protectionist headwinds.
There are, of course, challenges for dealmakers to navigate. Certain regulatory hurdles may be lowered in 2017, some may be raised. Protectionism may result in continuing scrutiny of certain inbound investments.
However, the conditions for strong M&A activity remain. There is lots of cash that corporates and private equity firms need to deploy. Interest rates are still low and stock markets are up. The steady but restrained economic growth has encouraged dealmakers to seek growth opportunities through combination.
If the new administration and Congress are able to implement a pro-business agenda, it will increase the ability of US companies to make acquisitions at home and abroad and increase the attractiveness of the US to non-US acquirers. We are very optimististic for 2017 dealmaking.