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Study: Retail M&A activity set to increase in 2018

Look for retail M&A deal volume to increase this year after holding steady in 2017.

That’s according to A.T. Kearney's 2018 Consumer and Retail M&A Report: Can M&A Reignite Growth in Consumer and Retail? In 2017, not accounting for large deals, M&A deal value was a scant 2% below the previous year, with activity essentially matching the hot market of 2016, the report noted.

But with the completion of several political elections around the world, and both private equity firms and consumer products companies reporting record amounts of cash reserves, the report predicts a rise in global M&A deals.

It also predicts legacy companies increasingly using M&A for growth and innovation, and more outbound deals for the U.S. than there have been, due to rising interest rates.

The A.T. Kearney report is based on interviews with C-level retail executives. Three-quarters of the respondents said they are using M&A to help their companies acquire new capabilities, expand their product portfolios, access new customers, or increase their geographic reach. The market is characterized by optimism from those at the top — for example, 71% of respondents reported that M&A is creating value, up from 48% last year.

“While some key trends in the market will become even more entrenched — such as record-high cash reserves and the continued ease of global trade that M&A represents — others will shift," said A.T. Kearney Partner Bob Haas, leader of the firm's global Mergers & Acquisitions Practice and co-author of the report. "Much of the wait-and-see climate we saw in 2017 that has characterized M&A globally has dissipated. At the same time, with interest rates finally on the uptick, we will likely see an increase in U.S. companies making innovative acquisitions to stay relevant."

See A.T. Kearney's full 2018 Consumer and Retail M&A Report online here.

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