What a difference a year makes…

As has been well documented, the value of announced global M&A deals in 2015 finally overtook the record levels recorded in 2007, a major contributing factor to this record breaking year being the "mega deals" carried out between multinational corporates in a few key industry sectors.

2015 saw 66 deals announced that were greater than $10 billion, with 17 such deals announced in Quarter 1 alone.

Roll forward one year and Bureau van Dijk's Zephyr database – recently revealed to be a double-winner at this year's International M&A Awards – is reflecting a considerably more cautious global deal environment, where only eight such "mega deals" have been announced in the first quarter, and so far only three have been announced in Q2.

So where has all the corporate and private equity cash gone since the turn of the year? Does this mean that our dealmakers face another seven-year hiatus of record-breaking deal activity?

We know that there are still significant funds available to private equity firms for the right investments. We also know that corporate balance sheets are broadly healthy. So why are we seeing the return of an apparent malaise within the deal-making environment?

One word springs to mind and that word is uncertainty.

There are a number of factors creating a level of uncertainty for corporates and individuals around the world: the EU referendum, now just two weeks away; US presidential elections; slower economic growth in the world's first or (depending on the definition used) second largest economy, China; and other geopolitical issues.

While you could reasonably argue that some of these are continent- or country-specific, the potential direct and indirect impact of any or all of them is sufficient to be spreading ripples of cautiousness through households and boardrooms alike.

Filed under: private equity, global, M&A, 2016