Study: Execs pausing on mergers

Executives around the world are cooling to the idea of mergers and acquisitions in the face of rising trade tensions, notably between the US and China, a leading adviser on international corporate deals said Monday.

In its half-yearly assessment of corporate mergers and acquisitions, or M&A, EY (Ernst and Young) found that only 46 percent of executives are planning a takeover in the next 12 months. That’s down 10 percentage points from a year ago and marks the lowest level in four years.

“Geopolitical, trade and tariff uncertainties have finally caused some dealmakers to hit the pause button,” said Steve Krouskos, a global vice chair at EY. “Despite stronger-than-anticipated firsthalf earnings and the undeniable strategic imperative for deals, we can expect this year to finish with much weaker M&A than how it started.”

EY highlighted the dispute between the US and China and uncertainty over Britain’s looming exit from the European Union as key reasons behind the decline in executives’ interest in deals.

EY also found that many of the upcoming deals that are being considered are in places where trade uncertainties are highest, as the executives try to preempt a potential change in the legal landscape. Britain, for example, is now the number two destination for deals, up from fifth in April.

EY’s survey was based on responses from more than 2,600 executives across 45 countries. /