23.01.2015 | Europe M&A Report 2014

M&A for growth: <br />Companies are using M&A activity as a tool for growth and are looking for targets located overseas. The US was central the recovery, since its economy attracted bidders from Europe. Especially for well-positioned German companies have been looking for targets in the US.

Tax inversion: <br />M&A deals related to tax-inversion conducted by US companies surged in 2014, although they are a feature to the M&A markets for years. First, these companies use revenues that are trapped overseas to finance the transactions and second, the acquisition of a European company often comes along with tax benefits if the main business activities are shifted to Europe. Yet, failure rate has been high and tax inversion is not a main driver of overall M&A activity.

Activism on the rise:<br />Yet, the high-level of deal activity can be seen as sign of confidence, since companies are more confident to pursue also more daring deals. In addition, boards are receiving a high level of support to do deals from shareholders. Especially in the US, shareholder activism is a main driver of M&A growth. For 2015, shareholder activism is expected to play a larger role also in Europe.

Industries:<br />In Western Europe the main deal activity took place in the healthcare, technology, media as well as telecoms sector. While a large portion of healthcare deals was transatlantic, the major part of TMT deals took place within Europe. For 2015, it is believed that the activity will be broad-based, including also utilities and industrials, both are traditionally important drivers of M&A activity.

Sponsors emerge:<br />Financial sponsors are expected to play a more important role in upcoming deal activity. In 2014, financial sponsors were pre-occupied with returning cash to fund-holders by exiting investments. For 2015, it is expected that they will invest their fresh funds and thus be a main driver of M&A activity.

Quelle: Merrill Datasite