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2014: STRONGEST YEAR FOR GLOBAL M&A SINCE FINANCIAL CRISIS

29 January 2015

2014: STRONGEST YEAR FOR GLOBAL M&A SINCE FINANCIAL CRISIS

Clifford Chance launches Insights into M&A Trends 2015 report

A report by international law firm Clifford Chance analysing M&A activity in 2014, and offering views on challenges and opportunities for 2015, is launched today.

Clifford Chance's Insights into M&A Trends 2015 covers the following topics:

  • Challenges and opportunities for M&A in 2015
  • The MINT economies of Mexico, Indonesia, Nigeria and Turkey and what to expect in 2015
  • Which sectors are hottest, and which are slowing down
  • Region by region overview of M&A trends, and cross-border flows between the key regions
  • Sponsor-led M&A and the evolution of private equity
  • Developments in the financing market for M&A
  •  Busted deals - and how to mitigate this risk
  • Forthcoming regulatory developments and their impact in 2015

Looking back on a very strong year for global M&A, where deal values exceeded levels not seen since 2007, M&A partners at Clifford Chance draw on their experiences and knowledge to share insights for the year ahead, and look back at the main themes of 2014.

A look at 2014:

The report by Clifford Chance shows that the US market is enjoying a strong period of M&A activity with total deal values up and growth driven in part by inbound deals. In terms of sectors: healthcare outperformed other industries as its market share of total deals rose by 4%. The Energy, mining and utilities, and TMT sectors saw the strongest M&A activity over the last 12 months.

Inter-regional cross-border M&A currently accounts for 27% of total M&A. The report notes that whilst the search for growth outside stagnating home markets is encouraging cross-border M&A, geo-political tensions and greater political and regulatory scrutiny are challenges for the M&A market in the year ahead. Difficulties in achieving cross-border integration are also holding back potential deals.

Guy Norman, Global Head of Clifford Chance's Corporate Practice, said:

"2014 brought a long-awaited resurgence in global M&A. As corporates were seeking to expand their global footprints and consolidate within their industries, and financial sponsors searched for higher returns in new markets and sectors, we saw strong levels of cross-border transactions. They were typically financed with excess cash, or through tapping the global pools of liquidity which were increasingly available from multiple global sources through an ever-increasing variety of innovative structures."

"As we look ahead to the rest of 2015, the current economic and political backdrop means the outlook for M&A activity is mixed. Despite global uncertainties and challenges, for those who are informed, agile and willing to take calculated and considered risks, there are attractive opportunities."

2015 insights

TMT / Cyber-security risk: TMT sector M&A is showing no signs of slowing down, as the underlying fundamentals support consolidation and convergence. Cyber security and data privacy compliance are set to provide an increasingly important focus for deals in sectors where technology is important.

Private Equity and Africa: In the ongoing search for higher returns we expect diversification by sponsors to continue.  The value and volume of transactions in Africa is increasing in part due to a number of private equity exits given their cycle in the market.  This market evolution greatly broadens the nature of the assets being sold and will create opportunities not just for traditional African private equity investors but also for developed market private equity investors and international corporates, in some cases to invest in Africa for the first time.

M&A Financing: Liquidity in the capital markets has contributed to a general sense of buoyancy in conditions for debt financing which can only be accretive to the prospects for M&A in 2015. Continued development of capital structures, a growing range of financing products, continued availability of bank lending for big ticket corporate M&A, alongside new institutional lenders and a cross-influencing of terms between financing products and markets is providing borrowers with an ever-greater choice of "pools" of liquidity to access for financing  M&A. This year, bespoke and innovative financing options for large cap-deals are expected to continue to lead the way.

Competing taxation aims collide: Governments are tackling abusive tax planning through a re-shaping of domestic and international tax rules and challenges against countries and taxpayers. But at the same time governments are engaging in competition to make their tax regime more attractive and encourage inward investment. Planning corporate deals requires more care than ever to ensure that expected tax benefits are secured.

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