BDO’s latest conference of the Americas took place in the country where one off the most significant political events of 2016 took place. As our M&A professionals gathered in Miami, we exchanged views with colleagues and clients on the impact of the new President Donald Trump in general and M&A activity in particular. In this issue, we share the results and provide forecasts for 2017.
Since the beginning of 2017 markets have honoured Mr Trump’s economic growth plan, with US Indices such as the Dow Jones Industrial Average reaching a new, all-time high. But it becomes clearer as time passes that the separation of powers in the US is still functioning. The Department of Justice has limited President Trump’s power several times and it appears that his action plan might not be implemented as fast as he wishes.
With the re-election of the Dutch Prime Minister Mr Mark Rutte, the likelihood of outsider groups winning major elections has receded. This is further confirmed by the centrist win in the very recent elections in France. Since Great Britain decided to leave the European Union, a moderate French President might preserve the Old Continent from any further break down. The Italian referendum, another key political event on the European agenda, is still to come. Nevertheless M&A activity in Southern Europe has performed strongly within the last few years, prompting BDO to select Milan as this year’s venue for the M&A conference.
Looking back on Q1 2017, we can determine that political uncertainty caused a slowdown in M&A deal-making. This resulted in the weakest quarter since Q1 2013. Our BDO Heat Chart clarifies that investors postponed deals due to ongoing political and economic uncertainty. The number of potential deals has massively increased during the first quarter. This makes us confident that – assuming no major political or economic surprises take place – some of the held-back deals will go ahead, resulting in a stronger upcoming quarter. But on the other hand we suspect that due to the ongoing political uncertainty, the trend for larger sums being invested in fewer deals may continue.