Encouraged by recent policy changes and positive economic growth, 86 percent of executives surveyed expect the global M&A market to improve over the next 12 months, according to Ernst & Young LLP’s twice-annual Global Capital Confidence Barometer. In the U.S., 72 percent expect the domestic M&A market to improve, a considerable uptick from 25 percent of respondents six months ago. EY surveyed more than 2,500 executives from 43 countries for the survey, including more than 500 executives in the U.S.
The polled executives are feeling good about the economy, with 96 percent in the U.S. indicating that economic conditions are stable or improving. They’re also optimistic about deal making, with 54 percent of the U.S. executives surveyed expecting to actively pursue M&A, a climb of 12 percent since October 2017. Also, 61 percent expect their pipeline of potential M&A deals in the next 12 months to grow, which is three times higher than the percentage reported one year ago.
Deal discipline is one reason 2018 looks to be a healthy year for M&A—a deal market that is “robust but not overheated,” according to the report. The survey also shows that acquisitive companies are increasingly interested in making deals to rapidly add talent and innovation, rather than building staff organically, especially for highly technical skills or jobs associated with the digital economy.
Of the U.S. executives in the EY survey, 58 percent say that acquiring talent is the top strategic driver for acquisitions. Another recent survey—by SunTrust Banks Inc. (NYSE: STI) of small- and middle-market businesses-- also found that acquiring skilled talent is a major driver for M&A.
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