Global M&A activity continued its surge in Q1 2015, marking another quarterly increase in deal volume on a trailing twelve month basis, continuing a streak of consecutive increases that began in the first quarter of 2014. The data, published by Deloitte in its M&A Index H1 2015, also measured a $20 billion increase in deal value as well over the same period last year, recording $583 billion worth of deals since the beginning of this year, an increase of over 3.5%.
According to the report, the increase in global M&A deal volume was primarily driven by such factors as depressed oil prices, appreciation of the US dollar, China’s increasing influence on the global M&A scene and pressure from investors to focus on top-line growth. Regionally, much of the deal value recorded so far this year is in the US and Asia, with North American companies announcing $279 billion worth of deals in the first quarter, representing 55% of the global M&A market. Together with Asian companies, the North American and Asian regions comprised a staggering 83% of the global M&A deal value in Q1 2015, which is up from a 68% share overall last year. A major trend so far this year is that European companies have not been active acquirers. Last year European acquirers were involved in $771 billion worth of deals, representing 28% of global M&A. This year their share has been reduced to half that, announcing only $68 billion worth of deals so far.
Another interesting highlight from the report was the increased M&A activity in the mobile communications sector where last year, the sector saw the most number of deals since 2011. The sector remains poised to enjoy an abundance of M&A activity as increasing competition and changing consumer consumption habits are expected to spur further consolidation. The report projected that the broader technology, media and telecommunication sector will likely continue to lead the other sectors in global deal value in 2015. The consumer business sector is also expected to carry its momentum into 2015 as many consumer-oriented businesses review their portfolios and divest their non-core assets.
Finally, another promising signal for 2015 was the indication of higher cash balances coupled with relatively flat debt levels of the non-financial constituents of the S&P Global 1200, continuing trends that began in the aftermath of the financial crisis. With a strong start to the first quarter of 2015 and such fertile economic fundamentals, global M&A activity should continue to show strength in the second quarter and throughout 2015.