Deal values this year to date have topped US$ 2.69trn – a level not seen since before the
global financial crisis. We are seeing, in particular, cross-border and cross-regional M&A
flourish, as corporates seek to expand their global footprints and enter new markets.
For the moment financing deals is not a problem for many organisations – many have
excess cash on their balance sheets, and global pools of liquidity for deployment in
target markets are increasingly available from a growing range of sources and with very
attractive pricing to those who are keen to access them.

The US has, once again, seen the lion’s share of activity in 2014, with domestic, inbound
and outbound M&A up significantly on previous years. Domestic and outbound activity
have been driven in part by the increased values for listed equities, which have allowed
companies to finance big deals with combinations of stock and cash. The first half of
the year also saw a number of mega ‘inversion’ deals, before the US administration
acted in September to make inversions more difficult to accomplish and to diminish their
economic benefit.

As we move towards 2015, the picture is mixed: there are significant risks and
challenges that have the potential to stall M&A activity in key regions in the months
ahead – for example, should the growth rate in China slow further, political divides within
the eurozone deepen, or political deadlock in the US return. Oil prices seem to be on
a sustained, if volatile, downward trajectory, economic sanctions targeting Russia are
continuing to bite, and a government election in the UK in May 2015 which, depending
on the result, may cause renewed uncertainty on the UK’s status within the EU – these
factors are causing uncertainty currently, and their longer term effect on M&A activity in
2015 is by no means clear.

However we are very aware, through our work with our clients, that the risks and
challenges can create attractive opportunities for those who are informed, agile and
prepared to take manageable risks. We expect to see a number of trends developing
in the year ahead, including: increasing M&A activity in Africa driven by both inbound
investment and growing intra-African M&A flows; further diversification of the private
equity industry as it adapts to the post-crisis environment; and continuing convergence of
financing terms and market standards in acquisition financing.

Guy Norman
Global Head of Corporate, Clifford Chance LLP