Election delays some M&A deals: report

Dive Brief:

• Mergers and acquisitions professionals are extending transaction timelines in response to concerns over potential regulatory changes stemming from global elections, according to survey results published by M&A software provider Datasite. 
• Over 45% of global dealmakers extended their timelines this year to accommodate potential election-related disruptions, including regulatory changes, according to a report on the findings released Wednesday.
• “With a record share of the world’s population voting this year, there are implications for economic and market performance that add another layer of complexity to M&A transactions,” Datasite CEO Rusty Wiley said in a press release.

Dive Insight:

The global volume of deals valued at over $1 billion rose 31% in the third quarter compared with the year-earlier period, the highest level in two years, according to an analysis by Willis Towers Watson.

In the wake of the Federal Reserve’s recent decision to cut the main interest rate by a half percentage point, dealmaking might be even more palatable for some companies, Mitch Berlin, Americas vice chair of strategy and transactions at Ernst & Young, said in emailed comments on Sept. 18. Still, he said deals continue to face headwinds, “including the upcoming U.S. presidential election, the regulatory environment, and how many rate cuts the Federal Reserve will make this year.”

The transactions most likely to be immediately affected by the upcoming U.S. election are large deals that face scrutiny from state or federal agencies such as the Federal Trade Commission, according to an article published by law firm Schwabe, Williamson & Wyatt in September. There is also uncertainty about proposals by the current administration to increase the federal capital gains tax rate and the Medicare tax, and differing views on the corporate tax rate, it said.

In Datasite’s survey, 81% of respondents said they were “very or somewhat concerned” about the impact of national elections on global M&A activity in the next 12 months, citing increased trade tensions and global interdependent supply chains as the top factors to most likely disrupt activity.

Datasite polled more than 620 global M&A professionals in the U.S., U.K., France and Germany in August.

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