"Riskier" European M&A market may mean sellers have to lower prices and heighten risk appetites this year

 
William Turvill
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The writing 'Deutsche Boerse' can be see
Deutsche Boerse and the London Stock Exchange agreed on a merger last week (Source: Getty)

Sellers may have to lower their prices and heighten risk appetites in this year's European mergers and acquisitions (M&A) market, according to a new report.

Law firm CMS's eighth annual M&A Study found 2015 was a record year for European activity, as was the case across the globe, with more than $5 trillion of deals tracked.

But 2016 is “already a riskier M&A environment” compared with last year, CMS said.

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Uncertainty in 2016 comes from “a number of grey or black swan events”.

These include the “long predicted slowdown of China's economic growth and the greatest migration to Europe for a century across a fragile Schengen zone”, CMS said.

The report also identifies US interest rates, this year's presidential election, the UK's EU referendum and a “more aggressive corporate tax climate” as reasons for uncertainty.

Stefan Brunnschweiler, a partner and global head of the CMS corporate/M&A group, said: “We have moved into a less stable environment in 2016 after a record year for M&A in 2015, but the major strategic moves made in so many industries in 2015 are bound to elicit a forthright response from competitors. Opportunities for decisive M&A continue.”

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Last year, total deal value in Europe was up 22 per cent to €990bn (£783bn) despite a drop in the volume of deals by six per cent.

Last year also saw the highest final quarter on record, with deal value exceeding €420bn.

CMS said: "As the landscape changes in 2016, sellers may have to lower their price expectations and/or heighten their risk appetite."

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