KPMG: Quarter higher merger & acquisition deal value

The value of announced M&A deals worldwide has increased with just over a quarter (26%) in the first six months of 2014, compared to the last six months of the previous year. The number of transactions has, however, slightly dropped, concludes a new research from KPMG.

Every six months, accounting and consulting firm KPMG conducts research under a thousand listed companies into their appetite for merger and acquisition (M&A) deals and the state of the global M&A market. The results are presented in the so-called ‘Global M&A Predictor’ report. The most recent research shows that the M&A market has picked up considerably in the first half of this year, and has witnessed an increase of 26% in the value of announced M&A deals. According to the consultants, the improving global economy and large corporate cash reserves have contributed to this development.

Global appetite for M&A
The research shows that the global appetite for M&A is high, with predicted forward price/earnings ratios remaining higher over the past year. The confidence among larger companies is especially high in Europe, where predicted forward price/earnings ratios have risen 24% year-over-year. The high level of M&A interest is apparent across most industries; the only sectors that did not record double-digit increases in demand over the past 12 months are the Consumer Discretionary and Consumer Staples sectors.

Protectionism possible risk
Despite the large demand for M&A and the high predicted forward price/earnings ratios, the number of completed deals fell by 2% over the same period. “Overall, the picture is a positive one. Appetite for M&A deals remains strong, capacity is going up and we are starting to see an increasing number of deals being announced,” says Tom Franks, Global Head of Corporate Finance at KPMG. “There is a danger, though, that domestic protectionism, certainly in markets like the UK, France and Canada, could damage the recovery.”