According to a recent survey of 440 senior executives around the world, M&A activity is expected to increase in the next two years while major fundraising initiatives largely remain on hold. The survey showed that “respondents see M&A activity as the area where an increase in transaction volumes is most likely (49%), compared to 12 months ago, followed by an increase in IPOs (31%).” However, only 38% of corporate respondents stated that they expect to raise fresh capital in the next two years. Due to the anticipated lack of fundraising activity in coming years, competition for capital is expected to remain high and the trend of corporations hoarding cash reserves, for investment or as an eventual return to investors, may increase. In response to the survey results, Doug Guzman, Head of Global Investment Banking at RBC Capital Markets, stated that “the ability for corporations to part-fund their own transactions through cash reserves will be extremely attractive to banks, who are increasingly looking to reduce their exposure to risk.”
More information about the results of the survey, which was conducted by the Economist Intelligence Unit and commissioned by RBC Capital Markets, may be found here.