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The state of the deal M only 65 percent of respondents at the biggest companies ($5 billion or more in annual revenue) see accelerating deal flow in the next 12 months. Corporate respondents from financial services, energy and resources, and telecommunications, media, and technology (TMT) industries were the most optimistic, in sequential order, on the likelihood for more deals in the year ahead. Also telling was the jump among those who expect M and 29 percent of private equity respondents expect a surge, up from 19 percent a year ago.Volume, size, and type of deals to comeThe state of the deal | M and 90 percent of private equity respondents say they plan to shed assets in the year ahead. Of note: more private equity respondents expect to turn to initial public offerings (IPOs) for their portfolio company exits. IPOs are mentioned by 27 percent of respondents as the primary form of portfolio exits in the next 12 months, up from 19 percent a year earlier.Divestiture expectations70%81%20192018Divesting of technology that no longer fits with the emerging business model (technology cannibalization)16%15%Financing needs (reducing debt/raising capital)16%12%Change in strategy17%16%2017 2018Top reasons corporations cite for divesting a businessThe state of the deal | M&A trends 20198In our prior reports, global economic uncertainty, capital market volatility, and deal valuation ranked sequentially as the leading obstacles to M&A activity by corporate and private equity respondents, combined. While global economic uncertainty is still the No. 1 reason corporate respondents cite as an obstacle to M&A, all three of the aforementioned categories are cited by fewer respondents in our current survey, suggesting diminishing worries about these topics. Potential delays in business-related legislation, rising interest rates, anti-trust issues, and activist shareholder activity all increased from our last survey as potential obstacles to M&A in the year ahead.Eighteen percent of respondents cite global economic uncertainty as the top concern, down from 20 percent. This perhaps demonstrates the increased resiliency of companies and private equity firms to navigate through major global economic shifts and trade issues.We asked specifically about trade and tariffs for the first time this year. For corporate respondents, 36 percent indicated that global trade uncertainty was causing reduced interest in deal making, while 9 percent said that uncertainty has actually increased the desire for deal making over the next 12 months. For private equity respondents, 58 percent say that tariff negotiations will have some negative impact on operations, while 28 percent say it will not have much of an impact on those operations. More than half (55 percent) say that tariffs will have a negative impact on their cash flow in the year ahead.Headwinds, obstacles, and M&A drivers
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