The Deloitte M&A Index is a forward-looking indicator that forecasts future global M&A deal volumes and identifies the factors influencing conditions for dealmaking.

1. The Deloitte M&A Index
2016: Opportunities
amidst divergence
Q4 2015

2. Record breaking deal values in 2015
We are expecting 2015 to end with over
$4 trillion worth of deals making it the
highest for deal values since 2007.
However, on a last-twelve-months basis,
there was a slowdown in the volume of
transactions in the second half of 2015.
Figure 1. The Deloitte M&A Index
Deloitte M&A Index (projections)
M&A deal volume (actuals)
Q4 2015 M&A
deal forecast
Q4 2015 M&A
deal forecast
8,500
9,000
9,500
10,000
10,500
11,000
11,500
12,000
Q4
2015
Q3
2015
Q2
2015
Q1
2015
Q4
2014
Q3
2014
Q2
2014
Q1
2014
Q4
2013
Q3
2013
Q2
2013
Q1
2013
Q4
2012
Q3
2012
Q2
2012
Q1
2012
Q4
2011
Q3
2011
Q2
2011
Q1
2011
Q4
2010
Q3
2010
35,000
40,000
45,000
Q4
2015
Q3
2015
Q2
2015
Q1
2015
Q4
2014
Q3
2014
Q2
2014
Q1
2014
Q4
2013
Q3
2013
Q2
2013
Q1
2013
Q4
2012
Q3
2012
Q2
2012
Q1
2012
Q4
2011
Q3
2011
Q2
2011
Q1
2011
Q4
2010
Q3
2010
Global M&A deal volumes
Source: Deloitte analysis based on data from Thomson One Banker
Last twelve months deal volumes
High: 11,600
Low: 11,000
Mid: 11,300

3. Factors influencing dealmaking
Divergence in economic growth
After a strong recovery, the US economy experienced a modest slowdown in the
second half of 2015 and the IMF cut the US growth outlook slightly. The IMF also
expects modest growth in the eurozone, China has missed its growth target, whilst
Brazil and Russia have slipped into recession.
In contract, India will be the fastest growing major economy in 2015, and four
of the ten fastest growing economies in 2015 are in the ASEAN region.
Such divergence in economic growth means companies need to be actively
on the lookout for growth markets and deal opportunities.
-6
-4
-2
0
2
4
6
8
10
12
IndiaChinaUKUSEurozone
2008 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E
Figure 2. IMF real GDP growth, actual and forecast (2008-17E)
Source: Deloitte analysis based on data from Bloomberg
GDP growth %

4. Monetary policies among the major central
banks are diverging. In the US, the market
is widely expected to have already priced in
the gradual increases to the Federal Reserve
interest rate. While we do not expect any
shocks in the debt market, increase in the
cost of credit could lead to a slowdown
in the issuance of acquisition-related bonds
which globally stands at $282 billion,
a 15-year high.
At the same time, the ECB is committed to
its quantitative easing programme, which
has led to a slide in bond yields.
This presents opportunities for global
companies to take advantage of the
funding conditions in Europe to raise
additional debt.
Factors influencing dealmaking
Divergence in monetary policies
Source: Deloitte analysis based on data from Bloomberg
-150
-100
-50
0
50
100
150
200
250
Figure 3. US vs Germany ten-year government bond yields, 2006-15 YTD
Spread US-Germany (RHS)
Basispoints
US Generic Govt 10 Year Yield (LHS) Germany Generic Govt 10 Year Yield (LHS)
0%
1%
2%
3%
4%
5%
6%
2015201420132012201120102009200820072006

5. Factors influencing dealmaking
Divergence in corporate performance
S&P 500
STOXX®
Europe 600
Figure 4. STOXX®
Europe 600 Index and S&P 500 Index constituents
average net profit margin (%), 2000-14
Source: Deloitte analysis based on data from Bloomberg
0%
2%
4%
6%
8%
10%
12%
141312111009080706050403020100
Since the financial crisis, European corporate earnings have trailed those of the US
companies, where they are close to 15 year highs. However, the gap is expected to
narrow if European demand picks up following the ECB stimulus. We have already
seen European corporate margins increase at a strong pace since 2013, while S&P
500 companies are expected to show three consecutive quarters of declining
earnings.
We expect US companies to continue cross-border M&A to offset some of
the pressure, and benefit from growth in new markets.

6. Factors influencing dealmaking
Divergence in deal valuations and cash positions
P/E multiples for deals in the US and Asia are well above their
15 year average, whereas in Europe they are still close to
their average.
European companies have access to local markets that are
expected to grow faster than many other developed economies,
making them attractive acquisition targets at favourable deal P/E
multiples.
With $1.6 trillion, North American non-financial companies, led by
those in the US, have the highest levels of cash reserves in the S&P
1200 Index and this puts them in a strong position to acquire
assets in Europe.
Note: 2015 YTD refers to 16 November 2015
Figure 5. P/E deal multiples for US, Europe and Asia-Pacific as a target, 2000-15 YTD
US Europe Asia-Pacific Average
Europe:
22.2 on average
US:
24.5 on average
Asia Pacific:
21.7 on average
Source: Deloitte analysis based on data from Thomson One Banker
15x
17x
19x
21x
23x
25x
27x
29x
31x
33x
2015
YTD
201420132012201120102009200820072006200520042003200220012000
Figure 6. Cash reserves of the non-financial constituents of the S&P Global 1200 ($bn), 2008-14
Source: Deloitte analysis based on data from Bloomberg
Asia-Pacific Europe North America
0
500
1,000
1,500
2,000
2014201320122011201020092008

7. Factors influencing dealmaking
Impact of Chinese slowdown on M&A markets
Total disclosed deal values ($bn) GDP growth %
Source: Deloitte analysis based on data from Thomson One Banker and Economist
Intelligence Unit
Figure 8. China’s disclosed M&A deal values ($bn) and GDP growth (%),
2000-Q3 2015 LTM
Figure 7. Outbound Chinese M&A deal values into Europe and North America
Outbound deal values Inbound deal values
0
100
200
300
400
500
600
700
800
Q32015
LTM
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
Domestic deal values China’s percentage change in real GDP (%)
0
2
4
6
8
10
12
14
16
$35.5bn
$2.7bn
$8bn
$10.7bn
Europe North America
2015 YTD 20092009 2015 YTD
The decline in Chinese GDP growth and the shift to a consumption-driven
economy is mirrored by a steep increase in M&A activities, both domestic as well
as cross-border. So far this year, Chinese companies have spent $65.8 billion in
overseas acquisitions, with the majority in Europe. However, there was a decline in
the volume of outbound acquisitions made in the E&R and manufacturing sectors,
while there was an increase on the part of TMT and consumer
business companies.
The slowdown in Chinese growth is expected to have a ripple effect on
M&A markets, first in the commodities sector, where consolidation is expected, as
well as in commodity exporting nations where activities could slow down. It could
also lead to consolidation in sectors such as shipping and logistics which depend on
growth in trade.

8. Factors influencing dealmaking
Strong resurgence in Japanese dealmaking
Driven by the weak yen, Japanese corporate profits are at their highest levels in
over ten years. At the same time, Japan remains saddled with falling domestic
consumption compounded by a decline in real earnings, an aging population and a
shrinking GDP.
In response to these pressures, Japanese companies are actively looking
abroad for growth prospects.
Figure 9. Japan’s disclosed M&A deal values ($bn)
Source: Deloitte analysis based on data from Thomson One Banker
Outbound Domestic
$56.4bn
$81.4bn
$10.7bn
$46bn
2015 YTD 20092009 2015 YTD

9. Factors influencing dealmaking
Focus on integration
Since the beginning of 2014, companies have announced around
$4.9 trillion worth of deals globally.1
We estimate that annualised cost
synergies represent, on average, 3-4% of the transaction value.
This means that companies have committed to realise between
$150-200bn worth of annualised synergies.
If all the announced cost synergies are realised and sustained, this could
add an estimated $1.5-1.9 trillion to the value of these companies.
The stakes are therefore high and ensuring successful deal
integration is likely to be near the top of boardroom agendas for
many months to come.
Figure 10. Expected annual synergies as a percentage of disclosed deal value (%)
Energy & Resources
Professional Services
Life Sciences & Healthcare
Consumer Business
Telecoms, Media & Technology
Financial Services
Real Estate
4.2%
3.7%
3.5%
3.3%
3.29%
Average
announced
synergies of
deal value
2.9%
2.9%
1.9%
1.4%
Manufacturing
$4.9trn
Acquisition
premium
disclosed
deal value
upside
integration costs
Target
value
before M&A
Target
value
before M&A
$200-$250bn
$1.5-$1.9trnvalue
createdduetosynergies
Source: Deloitte analysis
Energy & Resources
Professional Services
Life Sciences & Healthcare
Consumer Business
Telecoms, Media & Technology
Financial Services
Real Estate
3.7%
3.5%
3.3%
3.29%
Average
announced
synergies of
deal value
2.9%
2.9%
1.9%
1.4%
$4.9trn
Acquisition
premium
disclosed
deal value
upside
integration costs
Target
value
before M&A
Target
value
before M&A
$200-$250bn
$1.5-$1.9trnvalue
createdduetosynergies
Source: Deloitte analysis
Energy & Resources
Professional Services
Life Sciences & Healthcare
Consumer Business
Telecoms, Media & Technology
Financial Services
Real Estate
3.7%
3.5%
3.3%
3.29%
Average
announced
synergies of
deal value
2.9%
2.9%
1.9%
1.4%
$4.9trn
Acquisition
premium
disclosed
deal value
upside
integration costs
Target
value
before M&A
Target
value
before M&A
$200-$250bn
$1.5-$1.9trnvalue
createdduetosynergies
1. Private Equity involved deals excluded

10. Factors influencing dealmaking
Cross border M&A
Cross-border M&A has been one of the key
features of 2015 – so far this year $1.07 trillion
in cross-border deals have been announced.
Europe has been at the centre of cross-border
deals, with European companies participating
in 53% of all announced deals. The North
America-Europe corridor has dominated,
worth $311 billion.
So far this year, the growth markets nations
have announced $49.6 billion of acquisitions
in G7 nations, whereas the G7 nations have
announced only $30.7 billion in M&A deals in
growth markets, the lowest in over a decade.
Cross-border deal flow is expected to be
a key theme in the coming years, as major
economies strike agreements and alliances to
bolster trade.
Figure 11. Cross-border deal values by target region ($bn), 2015 YTD
Note: 2015 YTD refers to 16 November 2015. APAC refers to Asia-Pacific; MEA refers to Africa/Middle East
Source: Deloitte analysis based on data from Thomson One Banker
Europe to UK
$207.9bn
UK to US
$33.8bn
US to APAC
$22.5bn
US to Europe
$114.1bn
Japan to
North America
$26.4bn
China to
Europe
$35.5bn
Inbound to Europe
North America: $150.9bn
APAC: $68.1bn
Inbound to North America
Europe: $160.5bn
MEA: $48.7bn
APAC: $56.9bn
Inbound to Asia-Pacific
North America: $31.4bn
Europe: $9.1bn
MEA: $10.5bn
2. The G7 comprises of Canada, France ,Italy, Germany, Japan, UK and US. The growth markets are defined as Brazil, China (incl. Hong Kong),
Czech Republic, Egypt, Hungary, India, Indonesia, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand,
Turkey, Saudi Arabia, United Arab Emirates.

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Contacts
Iain Macmillan
Managing Partner,
Global M&A Services
020 7007 2975
imacmillan@deloitte.co.uk
Sriram Prakash
Global Lead M&A Insight
020 7303 3155
sprakash@deloitte.co.uk
About The Deloitte M&A Index
The Deloitte M&A Index is a forward-looking indicator that forecasts future
global M&A deal volumes and identifies the factors influencing conditions for
dealmaking.
The Deloitte M&A Index is created from a composite of weighted market
indicators from four major data sets: macroeconomic and key market
indicators, funding and liquidity conditions, company fundamentals, valuations.
Each quarter, these variables are tested for their statistical significance and
relative relationships to M&A volumes. As a result, we have a dynamic and
evolving model which allows Deloitte to identify the factors impacting
dealmaking and enable us to project future M&A deal volumes. The Deloitte
M&A Index has an accuracy rate of over 90% dating back to Q1 2008.
In this publication, references to Deloitte are references to Deloitte LLP, the UK
member firm of DTTL.