This is why investors should hope for an uplift in M&A activity this year

 
William Turvill
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(FILES) A picture taken 17 April 2007 in...
Share prices outperformed company returns by an average 5.4 per cent in 2016 (Source: Getty)

Investors will be hoping for an uplift in mergers and acquisitions (M&A) activity this year, with a study highlighting the value added to companies by deals.

In 2016, buyers outperformed the average company by 5.4 per cent, according to a Willis Towers Watson (WTW) and Cass Business School study.

The outperformance was even more pronounced – 10.1 per cent – in 2015, a record year for M&A activity. So investors will be hoping to a return to these heights.

Read more: How boutiques have snatched bankers and M&A business from the heavyweights

Insurance company WTW has also shared its M&A predictions for 2017. Jana Mercereau, head of corporate M&A in the UK, is expecting:

Lots of local deals: due to global political uncertainty. US companies, in particular, are expected to invest at home following Donald Trump’s presidential victory.

Bigger, but fewer, mega-deals:

The business press has long focussed on ‘mega deals” over $10bn; 2017 may be the year when a $10bn deal is no longer noteworthy and we see a new class of “colossus” deals worth over $100bn.

Read more: After subdued 2016, these bankers are calling a 2017 bounceback for UK M&A

Extracting more value from M&A: “Due to increased scrutiny from shareholders, business leaders will invest more effort in creating greater value from past deal activity.”

Social responsibility:

Following populist political movements and the growing social unrest developing in countries; companies expanding overseas in 2017 will be held more accountable for their promised contribution to local economies, including job creation, fair employment and human rights.

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