Survey shows execs expect M&A activity to rise over next year

By Bryan Livingston
Managing Partner and CEO

Top business executives, feeling confident about the economy, say they are likely to do an M&A deal over the next year.

This news comes from the Ernst & Young “Global Capital Confidence Barometer,” which focuses primarily on dealmaking. The survey — mainly of executives from publicly traded companies — found that 75% of the respondents said their company was likely to do a deal over the next year — the highest percentage that EY has gotten on the survey since launching it in 2008. That’s up from 57% earlier this year.

In addition, 79% of those surveyed had a positive outlook for earnings.

This response dovetails into what we are seeing here at Capital Alliance Corp. ( where interest in middle-market M&A deals is decidedly up in the fourth quarter from what we’ve seen over the previous three quarters.

While we’ve seen plenty of speculation about when the next recession will hit, it appears some economists have backed off from forecasts that it will occur next year and have pushed the timeline out further. That bodes well for the M&A landscape.

There are several positive signs that have encouraged M&A activity in recent weeks, including a stabilization of oil prices at or slightly over $50 a barrel. In addition, we saw retail sales end the third quarter on a high note as wage gains and a strong labor market boosted consumer confidence. While consumer confidence tumbled in October, it still remains near a post-recession peak.

To be sure, the presidential election adds a bit of uncertainty to the mix, but we look for a strong finish to what has been to date a lackluster year for M&A.

We believe this strong finish could carry over into a robust 2017 as mid-market sellers, including privately held owner-operators, come to the table as they realize buyers remain willing to pay high multiples for businesses that can show several years of strong financials.

Capital Alliance Corporation is a Dallas-based investment banking firm with an extensive international reach and a 40-year history of providing trustworthy advice to private company shareholders who want to sell their businesses. Our team has deep operational and M&A experience across many sectors, including energy.