M&A PREDICTOR FEBRUARY 2015
The world’s largest corporates are expected to show an increased appetite for M&A deals and are likely to have more capacity to fund prospective transactions in 2015.

This is according to the latest KPMG Global M&A Predictor, a forward-looking tool that helps to forecast worldwide trends in M&A deals.

Globally, predicted forward Price/Earnings ratio – a measure of corporate appetite – has grown seven percent over the past year. The capacity to fund transactions, as measured by forecast net debt to earnings before tax, depreciation and amortisation (EBITDA), is expected to improve 14 percent over the next year.

Overall, the data paints an encouraging picture across the globe. Predicted forward P/E ratios for the largest North American corporates rose eight percent during 2014, and capacity to transact is expected to rise by 14 percent. There was growth in both appetite and capacity in Europe too, albeit at lesser rates, with forward P/E ratios rising by a modest four percent over the year.

In Asia,
  • Asia Pacific (excluding Japan) is expecting the biggest increase in appetite: forward P/E ratios rose 12 percent over the last year. The capacity to transact is predicted to rise by 15 percent.
  • ASEAN numbers echoed the global trend with P/E ratios increasing 10 percent over the past year and capacity expected to improve by 14 percent.
  • Singapore bucked the trend. Although the capacity to transact is expected to increase 11 percent, the country’s forward P/E ratio dropped three percent. It is the only country in Southeast Asia to see dropping appetite
  • Malaysia’s forward P/E rose five percent; Thailand by 22 percent, Indonesia by 19 percent and the Philippines by 23 percent.
© 2016 KPMG Services Pte. Ltd. (Registration No: 200003956G), a Singapore incorporated company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.