2 | The Deloitte M&A Index Q3 2015 Factors influencing M&A in Q3 2015 Political and currency risks undermine Figure 2. Domestic and cross-border European M&A deal values 15 YTD* European corporate confidence ($bn), 2012- The European Commission is forecasting 1,200 1.5 per cent growth in the euro area in 2015, the highest since 2011. This positive outlook is 1,000 220 mirrored by strong corporate sector earnings that will further benefit from potential increases 800 181 206 in exports due to the weakening euro. 122 600 118 The European Central Bank’s quantitative easing 97 400 201 programme is resulting in a decline in yields of 597 646 Disclosed deal values ($bn) 417 44 euro denominated bonds and an increase in 200 asset valuations of European companies. 232 0 2012 2013 2014 2015 YTD This in turn is prompting European businesses Domestic deal values to sell to overseas acquirers. So far this year Outbound deal values $201 billion worth of inbound deals have been Inbound deal values announced, almost surpassing the $220 billion *2015 YTD as at 23 June 2015 announced during the whole of 2014. Source: Deloitte analysis based on data from Thomson One Banker However, with the euro depreciating by 18 per cent against the dollar since the beginning of 2014, it has become more expensive for European companies to make overseas acquisitions. So far this year only $44 billion worth of outbound deals have been announced by European companies, much lower than the $206 billion in 2014. Against this backdrop, political risks in Europe have also heightened, and together with currency pressures, are dampening corporate confidence for acquisitions.