The Deloitte M&A Index Q3 2015 | 3 Factors influencing M&A in Q3 2015 A surge in US M&A Figure 3. S&P500 FCF and dividend yields and Bloomberg corporate bond 15 YTD In past editions, we highlighted that while yields, 2010- global indices were hitting record highs, 10% annual revenue growth for their constituent companies is challenged, putting CEOs under 8% pressure from investors. 6% S&P 500 non-financial constituent companies 4% had $1.62 trillion in cash reserves for the year 2014. The free cash flow yield for the S&P 500 2% was 5.22%, the dividend yield 2% and the 0% Bloomberg USD corporate bond yield 3.11%. 2010 2011 2012 2013 2014 Current funding conditions and cash positions S&P 500 FCF yield should give potential acquirers the confidence Bloomberg USD High Yield Corporate Bond Yield to do M&A, since they can fund acquisitions Bloomberg USD Investment Grade Corporate Bond Yield by borrowing at favourable rates and service S&P 500 dividend yield debt payments using free cash flow. Cash reserves of non-financial constituents of the S&P500 ($bn), 2010-14 There has also been a rise in activist shareholders, who are putting pressure on $1,178 $1,308 $1,424 $1,612 $1,624 boards to pursue growth or give cash back $ $ $ $ $ to shareholders. Meanwhile some companies are taking more aggressive measures while pursuing M&A and we are seeing an increase 2010 2011 2012 2013 2014 in hostile deal announcements. So far this year $240 billion unsolicited deals have been Source: Deloitte analysis based on data from Bloomberg announced globally, the highest levels since 2007.