EY research reveals falling appetite for acquisitions

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The corporate appetite for acquisitions is at a four-year low, according to research by professional services firm EY conducted in 45 countries, including Hungary. The fall is considered temporary, however, with the momentum of the transaction market expected to pick up again from next year.

Despite the fact that the number of mergers and acquisitions (M&As) broke records this year, the corporate appetite for acquisitions has never been lower in the last four years, notes EY. This negative mood is prompted by growing regulatory uncertainties, as well as trade disputes surrounding Brexit and China versus the U.S.

The majority of respondents named geopolitical uncertainty as the biggest risk. Less than half of companies are planning to make an acquisition in the next 12 months, down from nearly 60% last year.

"The geopolitical, trade, and tariff-related concerns made many heads decide to suspend acquisitions, so despite the unexpectedly strong first half of 2018, fewer transactions may happen than expected," says Botond Rencz, EYʼs country manager for Hungary. "This hiatus is presumably temporary, and the momentum should pick up in the second half of 2019."

The growth prospects of the M&A market are further enhanced by strong macroeconomic bases, with around 90% of respondents expecting the transactional environment to improve. According to the vast majority of those surveyed, the growth prospects of the global economy are strengthening, with a mere 2% of company heads expecting market instabilities in the short term.

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