M&A Confidence Waning As Deal Value Smashes Record

November 12, 2015

​Fenwick & West partner Dave Healy, co-chair of the firm's mergers and acquisitions group, was quoted in a Law360 article looking at a reported decline in confidence among C-level executives about the future of M&A deal-making, despite the fact that global deal value is at an all-time high of more than $4 trillion.

Law360 reported that a recent survey by Dykema Gossett PLLC shows that the number of senior executives and advisors who believe the M&A market will grow during the coming year is down to about 37 percent from 59 percent a year ago.

According to Healy, a variety of factors – from uncertainty about interest rates to the decline in China's economy and instability in Europe and the Middle East – are causing investors to be more selective in their approval of M&A activity than they had been in recent years.

"That could be an indication that the market is a little bit less receptive to M&A," Healy said. "[This] could in turn erode CEO and board confidence in doing M&A for M&A's sake, as opposed to doing the right deal for the right price," he added.

On the other hand, Healy noted, positive signs such as cash availability remain. And, he noted, the growing number of megamergers will likely lead to more deals, as the new entities seek to focus on their core businesses and shed peripheral ones.

"The expectation is that there is still more consolidation to come, more divestitures to come, and the rate of M&A has been really high," Healy said. "We expect it to continue."

The full article is available through the Law360 website​ (subscription required).​