The Deloitte M&A Index H1 2015 | 3 Factors influencing M&A in H1 2015 The strengthening dollar is fueling cross- Figure 4. Global currencies depreciation against the dollar since the beginning border M&A activity for the US corporate of 2014 vs. increase in deal volumes (%), 2013-14 sector 40% The strengthening US economy has led to a 30% 31% weakening of many global currencies against 30% 27% the dollar. These conditions are giving a boost 20% 19% 12% 13% 15% for cross-border M&A activities for the US corporate sector as many assets abroad now 10% 4% look more attractive in dollar terms. We have 0% observed an increase in inbound deal volumes -2% -1% from the US in countries whose currency has -10% -9% -8% -13% -10% depreciated against the dollar. For example, -20% -16% since the beginning of last year the euro lost -21% 21% of its value against the dollar while in -30% Europe Canada Japan Switzerland UK Singapore India China 2014 inbound deal volumes into Europe from Change in currency against USD (%) the US increased by 30%. Change in inbound M&A volumes from the US (%) Source: Deloitte analysis based on data from Thomson One Banker and Oanda ‘Economy of expectations’ Figure 5. S&P Global 1200 Index vs. S&P Global 1200 constituents’ In 2015 the S&P Global 1200 Index reached revenue growth (2001-15 YTD)2 record highs; however, annual revenue S&P Global 1200 Index growth for its constituents has been declining 2,500 25% for three consecutive years. 2,000 The search for yield by investors following 1,500 the US programme of quantitative easing, 0% 1,000 coupled with major corporate share buyback 500 and dividend programmes, has driven valuations and sent indices to new highs. 02001 02 03 04 05 06 07 08 09 10 11 12 13 142015 -25% Following the end of quantitative easing in the US, investors are likely to focus on S&P Global 1200 Index fundamentals and CEOs will be under more S&P Global 1200 constituents’ revenue growth (%) pressure to meet market expectations. Source: Deloitte analysis based on data from Bloomberg With top line performance still hard to realise we anticipate that companies will increasingly need to pursue options such as M&A to achieve growth. 2. 1,165 companies reported their full year results by 23 March 2015