M&A activity set for a booming 2016

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Mergers and acquisitions are set to continue apace in 2016, with the majority of global companies planning to acquire.

A new report from EY shows 59% of global companies are planning to acquire in the next 12 months. The company's Global Capital Confidence Barometer found that global companies recorded the higest appetite to acquire in the survey's six-year history.

The survey said the M&A market was buoyed by record values in 2015. Global deal value was up 35% in 2015 compared to 2014. Looking ahead to 2016, 83% of executives expect M&A activity to increase.

“With modest increases in global GDP, organic growth alone is not enough for companies to expand and reshape at the pace they need. Technology and changing consumer preferences are disrupting business models and blurring sector boundaries. In that context, the search for growth is lifting deal-making to record highs – and executives are focusing on M&A to secure innovation, competitive advantage and market share for the foreseeable future,” EY global vice chair transaction advisory services Pip McCrostie.

In spite of the high appetite to acquire, the EY report indicated executives are careful in approaching M&A deals. Seventy-three per cent said they had walked away from M&A deals in the past 12 months because they were not fully aligned with their strategy.

“Executives are taking a long-term view and evaluating deals more carefully than ever before. They are stepping back when necessary. This is not ‘a deals for deals sake mentality,’” McCrostie said.