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EY: M&A to remain hot in 2016

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EY:  M&A to remain hot in 2016

Middle market companies and private equity will continue to be active.

According to professional services firm EY, the dynamics that made 2015 a record year for US dealmaking will continue into 2016, pointing to ongoing resilience for the M&A market.

Driven by megadeals, US deal values rose a staggering 55.1% in 2015 to a record high at $2.3 trillion, compared to $1.5 trillion in 2014. Seven of the largest ten global deals in 2015 involved one or more US companies. Meanwhile, volumes declined by 3.2%, with 10,845 deals compared to 11,198 in 2014. 

The outlook for 2016 is promising: 57% of US companies have three or more deals in their pipeline versus just 10% of companies six months ago.

US deal value was affected by a surge in high-profile megadeals. In 2015, 47 deals were valued at $10 billion or more, up 235% from 20 such megadeals in 2014. Additionally, 252 deals were worth between $1 billion and $10 billion, up 9% from 227 deals in 2014. Moreover, the US was the most targeted country in 2015, with 1,343 inbound deals worth US $408 billion. Markets are rewarding acquirers for these deals: shares of US public companies announcing acquisitions more than $1 billion have increased an average of 2% the day after the announcement.

There was robust activity in the upper-middle market too and that is expected to continue in 2016."

"It was a record-year all-around for US M&A and momentum will continue to be strong in 2016. US targeted M&A continues to dominate, attracting record values last seen in 2007. While the top megadeals garnered most of the attention, there was robust activity in the upper-middle market too and that is expected to continue in 2016," said Rich Jeanneret, EY Americas Vice Chair, Transaction Advisory Services. "The US will remain a hotbed for sustainable M&A activity in the immediate term, especially as financial markets continue to reward dealmaking. An overwhelming 74% of US executives expect to do deals in 2016."

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