Deloitte's predict merges and acquisition deals to top 22,000 in 2014

American firms are driving a boom in mergers and acquisitions

The Deloitte offices on Newcastle's Quayside
The Deloitte offices on Newcastle's Quayside

Business advisors Deloitte expect the number of mergers and acquisitions around the globe to rise by 9% year-on-year in the third quarter of this year.

So far this year the firm said almost £14,000 deals have been announced, worth around $1.38trillion, yet corporate finance experts at the business, which employs 180 people at its Newcastle office, believe this will rise even further.

The Deloitte M&A Index forecasts this to approach around 22,500 deals by the end of the third quarter.

The Index predicts 8,350 deals will be made in the third quarter of 2014, equivalent to a 9% rise year-on-year and a 6% increase on the second quarter of 2014.

David Frith, Deloitte corporate finance partner in the North East, said the market was being skewed by the number of withdrawn deals, such as US drugs giant Pfizer which officially withdrew from its attempt to take over UK pharma firm AstraZeneca.

Frith said: “Several high-profile withdrawn deals have skewed the public perception of the current M&A market, disguising a steady uptick in global M&A deal volumes.

“The rise in deal volumes is being driven by a boom in US deal making, where despite the severe weather related setback, US companies accounted for 55% of all disclosed deals by value in the second quarter.

“Europe is a key target for US companies.

“Year to date they have spent $89 billion on European companies and are likely to spend in excess of $150 billion on European deals this year.

“We believe the M&A market is on an upward trajectory as a number of hostile bids suggest that companies are looking to get deals done.

“The global IPO market is also performing strongly, in the year to date, over 700 companies have come to market totalling 53% of 2013 volumes, the highest recorded first half IPO volumes since 2011.

“Companies have raised proceeds of $103 billion which is a 20 per cent increase over the same period in 2013.

“However, only small amounts of the proceeds from IPOs are being channelled towards growth.

“We found nearly 34% of the amounts raised were earmarked for general corporate purposes, an 8% increase over 2013. It seems companies are taking advantage of the favourable conditions to raise equity, but have not yet decided how they want to use the proceeds.”

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