Global M&A Update: Current Market Factors

Despite a number of challenging economic headwinds, the market's desire for mergers and acquisitions remains strong, and analysts expect mergers and acquisitions to remain one of the major drivers of corporate growth. Ernst &Young (EY) recently published a report entitled  " Global Capital Confidence Barometer, Buying and bonding: Alliances join M&A as engines of growth" which describes why the appetite for M&A remains strong despite economic stagnation and slow growth rates.

The report identifies a number of market factors which are keeping demand for M&A high, including:

1. The closing of the valuation gap: The valuation gap (the difference in asset evaluation between purchasers and sellers) is starting to close. In 2015, volatility in prices, particularly among commodities, meant that there was a significant gap between what buyers and sellers thought was a fair price in valuations. In 2016, commodity prices have stabilized, leading a majority of executives to