Despite the level of global uncertainty in 2016, market participants were active across various jurisdictions, which led to a very strong year for M&A activity. Many markets and sectors recorded peak dealmaking as investors sought out new opportunities, even if the year did not quite replicate 2015’s year of ‘mega-deals’. A mixture of currency fluctuations and access to cheap debt meant that companies looked to acquire their desired targets.

In Europe, the UK’s referendum in June 2016 on continued European Union membership impacted investor behaviour both in the run up to the vote and after the result was announced. The threat of ‘Brexit’ lowered business confidence to some degree, and accordingly companies were more cautious in their deal pursuits in the first half of 2016. Dealmaking picked up in the second half of the year as investors came to accept the UK’s decision to leave the EU. Indeed, as the pound fell in value partly in response to the Brexit vote, overseas buyers saw opportunities to acquire cheaper UK targets, which was a driver of some high-ticket M&A activity. Across the continent more generally, the apparent rise in anti-EU sentiment did not unduly deter foreign investors (who initiated more projects in Europe in 2016 than were recorded in previous years), nor did it prevent the election of French President Emmanuel Macron in May 2017, a pro-Europe, pro-business centrist. Long-term European infrastructure projects were particularly attractive to investors, with interest coming from, among others, sovereign wealth funds in the Middle East and Asia.

Shifts in the US political landscape raised questions about how M&A transactions are to be governed. The election of President Donald Trump in November 2016 led investors to query whether he will implement some of the policies he promulgated during his campaign, particularly in relation to antitrust and tax. If implemented, a stricter regulatory environment would not be limited to the US, as tighter controls placed on the outflow of capital from China have meant that outbound deal value in the first quarter of 2017 was significantly lower than in the same period in 2016.

The year ahead presents continued uncertainty for the markets. Having officially triggered the process of leaving the EU in March 2017, the UK–EU relationship will be redefined as Brexit negotiations get underway. It is hoped that the resolution of some of this uncertainty in the second half of the year will foster an environment in which markets can thrive. There is already promising activity coming from international dealmakers in a range of active sectors, including technology, energy and mining. Markets over the past year have shown that despite an ever-evolving geopolitical landscape, there are numerous opportunities for those market participants keen to pursue them.

I would like to thank the contributors for their support in producing the 11th edition of The Mergers & Acquisitions Review. I hope that the commentary in the following chapters will provide a richer understanding of the shape of the global markets, together with the challenges and opportunities facing market participants.

Mark Zerdin

Slaughter and May

London

August 2017