The global transactions market remained remarkably robust in 2018 – despite all the macro uncertainty we read about every day. Dealmakers have been taking the long view, in a world where sitting on your hands and waiting for volatility to die down is no longer an option. As such, we are taking a cautiously optimistic view of the year as part of our fourth Global Transactions Forecast.
We predict that this year's momentum will continue into 2019, though in all regions, the first half of the year is likely to be more active than the second. At a regional level, we expect to see Europe down in transaction activity, but the Americas and Asia Pacific are set to post modest growth. As we identified 12 months ago, there are still real threats to free trade and investment flows and there remains potential for a much more serious outbreak of protectionism and isolation. It is incumbent on business, regulators and government to try to guard against that risk and their success in doing so will determine how well the business community fares over next year.
Global Deal Outlook
Completed M&A globally will close at USD 3.1 trillion for 2018, with over performers and under performers in both advanced and emerging markets. But 2019 could be a year of two halves. Several major deals announced in 2018 are set to complete in the first half of 2019, while underlying economic conditions should remain strong throughout this period. However, macro drivers will cool the market through the latter half of 2019. We forecast total values at USD 2.9 trillion for 2019, falling to USD 2.3 trillion in 2020.
With some major IPOs scheduled for 2019, we foresee total proceeds at USD 232 billion, easing to USD 160 billion in 2020. In 2021 and beyond, with borrowing costs settling at their ‘neutral’ rates and equity markets enjoying better growth, we see the potential for the start of a new upturn.
In 2019, we expect M&A and IPO activity to be led by the consumer, technology and communications, and finance industries, with positive macroeconomic and structural drivers in each case. We see energy forming a diminishing share of total M&A, with a pivot in the basic materials sector to metals and other minerals key to new technologies.
Hear from Michael DeFranco, Global Head of M&A, and Koen Vanhaerents, Global Head of Capital Markets, about the state of the M&A and IPO markets.