IntraLinks Deal Flow Predictor: Global M&A Activity To Show Modest Q1 Growth In 2016

• Q1 2016 globally announced M&A deals will show a modest seven percent increase over Q1 2015.
• The majority of growth will be in consumer, health care, high technology and real estate.
• Uncertainty over interest rates in North America and economic slowdown in China are behind the modest growth.

According to the latest IntraLinks Deal Flow Predictor(DFP), a product of IntraLinks Holdings, Inc. IL, globally announced M&A deals for Q1 2016 will show an increase of seven percent over Q1 2015.

Related: Deal Flow Predictor Calls For A 'Very Strong' M&A Market Through 2015

Modest Growth Predicted

This constitutes what IntraLinks calls “modest growth” for the period. The majority of that growth will occur in consumer, health care, high technology and real estate with energy and power, industrials and telecom showing a decrease.

Matt Porzio, vice president of M&A strategy and product marketing at IntraLinks noted, “2016 is shaping up to have a modest, but good start for global M&A deal announcements, coming off of what we’re predicting to be a record breaking year in 2015.”

Uncertainty In North America And China

“Based on our insights into early-stage M&A activity,” Porzio added, “we are predicting modest global growth due to uncertainty in North America (NA) over interest rates and the economic slowdown in China.”

Asia Pacific (APAC) showed growth in early-stage M&A activity of about three percent in response to fears of a Chinese economic slowdown and this summer’s turmoil in Chinese and emerging market equities.

NA actually saw a three percent reduction in early-stage M&A activity. This was caused by fears over a slowing U.S. and global economy and confusion regarding potential future interest rate increases by the U.S. Federal Reserve.

From Boom To ‘Not So Much’

IntraLinks continues to predict that 2015 will be a record year for global M&A announcements while noting the drop in confidence for 2016 in North America (NA) and Asia Pacific (APAC).

The IntraLinks DFP, which forecasts the volume of future M&A deal announcements by tracking the number of early-stage M&A deals that are in preparation or have reached the due diligence stage, has been independently verified as an accurate predictor of the number of future M&A deal announcements.

Latin America And Others Show Recovery

Meanwhile, according to Porzio, Latin America appears to be staging a recovery, showing the highest increase in M&A activity in more than 18 months. According to Porzio, early stage M&A activity in LATAM has been growing almost 49 percent.

Early-stage deal activity in Europe, Middle East and Africa (EMEA) has also accelerated, growing by 11 percent, compared to nearly seven percent in the previous quarter.

Overall Global Optimism Falls

Responses to IntraLinks’ latest quarterly Global M&A Sentiment Survey were consistent with the findings of the DFP.

Global optimism fell to 43 percent compared to 51 percent in the previous quarter’s survey. IntraLinks said this was the lowest level since the survey launched in Q4 2013 and the first time the percentage of optimistic respondents has fallen below 50 percent.

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Reasons Vary By Region

Optimism varied by region. EMEA was the most positive at 57 percent while NA was least positive, coming in at 48 percent.

APAC and LATAM were 54 percent and 50 percent respectively.

When it came to reasons, region also played a role. Respondents in all regions except LATAM expected a global economic slowdown to have the most impact on M&A activity over the next 12 months.

LATAM dealmakers expected monetary policy to have the most impact on M&A activity in their region.

Concern over a slowdown in Chinese economic growth was strongest in APAC and LATAM (67 percent and 77 percent respectively) versus NA and EMEA, which came in at 51 percent and 46 percent.

Download the complete IntraLinks DFP report.

At the time of this writing, Jim Probasco  had no position in any mentioned securities.