Yahoo Finance There's been a big spike in CEOs wanting to do an M&A deal
CEOs are feeling confident about doing a deal in the first year of Donald J. Trump’s presidency.
According to a recent survey from EY called the “Global Capital Confidence Barometer,” 79% of U.S. executives plan to pursue an M&A deal in the next 12 months, surpassing the survey’s long-term average of 47% since its inception eight years ago.
For the report, more than 2,300 senior corporate executives were surveyed worldwide, including 459 from large US companies.
In the first quarter of 2017, the U.S. saw the second-highest first quarter deal activity in a decade, with approximately $366 billion in deals, an increase of 22% from the same period a year ago.
The EY survey found than half of the U.S. executives, 54%, think the Trump administration is creating more M&A opportunities. In particular, 46% of U.S. executives are focusing on potential changes in the U.S. corporate tax code.
It’s not just the possible repatriation of overseas cash that has executives feeling confident. They’re also upbeat about the economy in general.
“The thing that really popped out to me is just the deal intentions,” Bill Casey, EY Americas Vice Chair, Transaction Advisory Services, told Yahoo Finance in a phone interview. “Normally, when we do this, generally a little less than half say they’re going to execute a deal in the next 12 months. The number has jumped up to a whopping 79%, significantly higher than what we’ve seen before.”
The higher-than-normal figure is another sign of CEO confidence underpinned by overall confidence in the economy. The survey found that 58% of U.S. executives view the economy as improving over the next year, from 4% a year ago.
“Clearly, there is a strong sentiment that the economy is certainly improving and is more stable than it’s been before. The overall resiliency in this market — you had the Brexit, the election, and the French elections — and yet, again, did that impact deal activity? The level in the U.K. didn’t slow.”
That said, 89% of U.S. executives cited geopolitical and economic uncertainty as the biggest risks to deal completion.
Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.
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