M&A cycle forecast to speed up
Further expansion of mergers and acquisition (M&A) activity into 2015 is forecast on the back of increased funding availability, lower economic uncertainty and continued pricing pressure in a slow growth environment, according to Standard Life Investments.
The research predicts drivers for more M&A activity in the next year will be led by improved business confidence encouraging firms to take more balance sheet risk by investing idle cash as the global economy recovers and Europe escapes recession.
This could be a way for some companies to boost market share, either in sectors where pricing or regulatory pressures are high, or in order to gain an advantage in fast-growing areas, according to Standard Life Investments head of global strategy Andrew Milligan.
He said all these factors would trigger increased M&A activity globally into 2015.
"The upshot should be positive for stock market valuations and client portfolios. Following an upturn in activity in the US, we consider increased M&A in Europe, Asia and emerging markets will follow suit," Milligan said.
"M&A should also broaden out, away from media, autos, the internet and beverages towards, for example, finance, real estate, software and telecoms."
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When it comes to M&A activity, the share of financial buyers such as private equity firms in Australia fell from 67 per cent to 12 per cent in the last financial year.
