Corporate dealmakers are bracing themselves for a further slowdown in business next year, with a new report forecasting a sharp slump in activity as geopolitical uncertainty mounts.
Initial public offerings (IPO) and merger and acquisitions (M&A) are set to drop in both activity and value during 2020 amid trade wars and growing fears of a global recession.
According to a new report from Baker McKenzie, M&A value will slump globally from $2.8 trillion in 2019 to $2.1 trillion in 2020, while IPO proceeds will slide from $152bn to $116bn over the same period.
“Make no mistake — deals are getting done, but the current slowdown is inevitable considering the continuing uncertainty around trade and regulation,” said Ai Ai Wong, chair of Baker McKenzie’s Global Transactional Group.
Wong added: “We know that around the world, there are many investors and companies with capital on the sidelines, waiting to move forward with domestic and cross-border deals.”
Many factors have impacted European deal activity, including global trade conflicts, Germany’s economic slowdown and uncertainty over Brexit, according to today’s global transactions forecast.
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The figures come on the same day as an EY report shows the UK is now the second most desirable location for M&A investment globally, losing its top spot to the US.
The UK was named in the biannual survey of more than 2,900 C-suite executives, ahead of Germany (in third), China (fourth) and Canada (fifth).