Global deals hit by Brexit and US presidential election

Oliver Gill
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Recent global deal growth has been arrested in the first six months of 2016 (Source: Getty)

Global M&A activity fell by over a quarter during the first half of 2016 as political upheavals including Brexit took their toll according to a report released today.

Concern about the UK referendum on EU membership and the upcoming US presidential election were cited as the drivers for the downward trend.

Global deals totalled $1.32 trillion (£1.01 trillion) in the first six months of the year compared to $1.81 trillion in the same period in 2015.

The UK was particularly affected during the second quarter as deal values halved in from $39bn to $19bn compared to the first quarter of 2016.

"Echoes of Brexit are consuming London, and deal makers have hit the pause button on new M&A deals until they can see clarity on the direction future leaders will take the UK," said Kirsty Wilson of Mergermarket.

In the US, deal values dropped just over 30 per cent during the first half to $562.7bn. Inbound activity to the US from the UK fell to just $5.9bn in the first six months from $15.6bn in 2015.

Despite uncertainty from the UK referendum, Germany’s activity rebounded after a sluggish 2015 with its cornerstone industrials and chemicals sector up over 250 per cent during the first half of 2016 at $17.6bn.

German companies are ramping up their expansion, at the same time as receiving a lot of interest from China focusing on the German expertise in manufacturing and industrials," said Wilson.

The report highlighted that China continued on its spending spree around the world, breaking records for its deals. Activity in European targets totalled $75.4bn and US hit $32.9bn - both over 150 per cent up on the same period last year.

A separate analysis of M&A by Dealogic saw a slightly lower global decrease in transactional values during the first half of the year, at 18 per cent.

Dealogic also highlighted that, although fewer deals by number were withdrawn during the first half of 2016, 10 of the withdrawals were in the $10bn and over category. This meant the value of abandoned deals more than doubled to $606bn.

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