Executive Summary
Merger and acquisition activity in the U.S. surged last year, the most active 12 months of deals since before the global economic crisis took root in 2008.1 That burst of activity doesn’t appear to be just a temporary rebound. Executives at U.S. private equity firms and corporations expect the robust pace of mergers and acquisitions to extend—or even accelerate—beyond that strong showing in 2015, according to survey findings in Deloitte’s second annual M&A Trends Report. Of the 2,500 respondents from corporations and private equity firms, an overwhelming majority, 85 percent, of corporate executives, said they anticipate deal activity in 2015 will extend last year’s momentum or even ramp up. On the private equity side, 94 percent of respondents—well above last year’s expectations—said they foresee an extremely active year for transactions in 2015. A strong M&A environment is expected across the board, in private and public businesses, in multiple industry sectors, in companies and private equity firms large, small, and in between. Several factors are making this a significant time for deal making. Corporate balance sheets remain flush with cash—in fact, an increased number of survey respondents this year said their cash reserves have swelled in the past 24 months. The U.S. stock market has continued its bull run, setting record highs in early 2015, and up until that point providing currency for transactions. The Federal Reserve has maintained its efforts to keep interest rates low, paving the way for companies to issue debt to finance deals if they choose that route. At the same time, the economy is forecast to grow at a restrained annual rate of no more than three percent a year through 2017, according to projections from Federal Reserve Board Members and Bank Presidents.2 Combined, those factors may continue to spur companies and private equity firms to initiate transactions that can help position them to outpace the growth of the economy.