IPO’s set to increase

17 Jan 2017

Global IPO's are set to grow by 25 per cent this year, as "cautious optimism" returns to the transactions market in 2017.

The Global Transactions Forecast (1) issued by Baker McKenzie in association with Oxford Economics, shows that after a year of political instability transactional activity should pick up over the next four years. This is based on a gradual upturn in global economic growth in the years ahead with the findings showing that, with the stability of the global economy being less under threat, and dealmaker confidence in the market returning "their apprehension should turn into appetite."

2017 will see floats reach $167bn (£138bn), up from $133bn in 2016.  Floats are then expected to see a dramatic upturn in activity, reaching $275bn in 2018 and 2019.

The tech sector is expected to be a key driver of global deals, where M&A is forecast to reach US$415 billion by 2018.

"If Snapchat's IPO is successful, it will most likely be the largest US-listed technology offering since Alibaba Group in 2014," adds Koen Vanhaerents, Global Head of Capital Markets at Baker McKenzie.

In contrast, acquisition activity, which slowed sharply in 2016 amid heightened economic and political uncertainty, is set to diminish further in 2017 to US$2.5 trillion from US$2.8 trillion in 2016 as global investors await clarity over Brexit, as well as the new US administration's policies on trade and investment.

Paul Rawlinson, Baker McKenzie's Global Chair, concludes: “We are clearly still in volatile times but deal-making is there to be done. Strong corporate balance sheets, cheap finance and moderate growth across markets and key sectors all point to an improving M&A run-rate later in 2017, after a cautious first quarter, and a significant uptick in 2018. The caveat is we need a benign Trump on trade and a soft-ish Brexit. Will we get that? Let's see.”

At Beavis Morgan, we have acted on significant number of M&A deals for SME and owner-managed businesses. We too are entrepreneurs and have done deals as principals and as advisers to clients. Our strong corporate finance and advisory offering, as well as our understanding of priorities for all stakeholders in the often challenging sale process, positions us well to assist in both the buying and selling of businesses.

For further information about how we can help you achieve your business ambitions, contact Paul Ashton or your usual Beavis Morgan Partner.

(1) Source: Cautious Optimism to Return to Transactions Market in 2017