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Trump’s most recent numbers represent an improvement over a survey in May when 70% of global dealmakers thought a Trump presidency would hurt global M&A. This was before the primaries were over.
WooTrader: Why do you suppose dealmakers tend to prefer Hillary Clinton over Donald Trump when it comes to impact on M&A?
Matt Porzio: It’s been that way for a while. Many global M&A professionals we survey feel more comfortable with the status quo.
In addition, some of the Trump rhetoric around trade that affects global businesses and cross-border transactions is coming through and is part of what we are picking up.
Does geographic area have any impact on a dealmaker’s attitude about a specific candidate?
I don’t know the exact numbers but the trend over time has been that outside of North America a higher percentage of respondents believe a Trump presidency would have a negative impact on M&A.
North America is more balanced and, coincidentally, less convinced that Clinton would have a positive impact. It could be because outside of North America people are less connected and aware of what the president can actually do in terms of policy.
Whatever the cause, outside North America, people tend to be more extreme in their viewpoint – both positive and negative.
Still North American dealmakers put the U.S. election above all other factors. Why do you suppose that is?
Deal making tends to be local. On the other hand, other things like the economy, Brexit and world events are not that far behind. In North America even though the U.S. election is top of mind, it has not frozen the deal market.
I would also add that our Dealflow Predictor continues to indicate that Q4 is going to be a pretty strong quarter for announced deals. That has not changed.
It’s also interesting that although 56% of respondents believe a Trump presidency would have a negative impact on M&A, only 15% actually think he will win. How does that affect sentiment?
I was speaking to one our clients recently and anecdotally most people expect Clinton to win the election but many bring up the recent Brexit vote to illustrate there is always a chance things will go a different direction than expected.
Overall with most respondents believing Clinton will win, although the prospect of a Trump presidency weighs on people’s minds, I don’t think it’s been enough to stop deal making.
What about sentiment regarding other factors such as the recent collapse of the pound post Brexit?
It’s interesting when we looked at the EMEA results I thought some of the monetary policy might be brought up more. Actually I think people are looking at Brexit and the devaluation of the pound as an opportunity as well as a problem.
When it first occurs, there’s a pause. After that people tend to see the dislocation as an opportunity.
In terms of expectations, North America expects more M&A deals in health care; EMEA and APAC anticipate a bump in industrial M&A; and LATAM expects more deals in energy? Any idea why that is?
I think it’s just the nature of the respondents and the fact health care is a significant industry in North America. With other regions it’s the same thing.
In Latin America, for example, energy and power have always been what drives the region. And the European market has been pretty consistent with industrials being strong over the last 3 quarters.
Regarding the proposed AT&T/Time Warner deal, Trump basically said, “No way,” while Clinton had a much more measured, “We’ll have to see all the details,” approach. How do political opinions affect whether or not an M&A deal gets done?
Significant media coverage in general puts more scrutiny on deals but these marquis deals are built to withstand the scrutiny. More mid-sized deals don’t get as much scrutiny and are less vulnerable.
The vast majority of deals do not go through significant review. The big deals take the brunt. Politician opinion puts more eyeballs on deals but at the end of the day the decision is going to be the decision regardless of the environment in many cases.