Following a five-year slump, there were indications of a possible return to the precrisis levels of 2006, as merger and acquisition (M&A) activity globally rebounded strongly over the past six months – and middle-market deals were driving the trend, an EY survey has revealed.

EY’s eleventh biannual global confidence barometer showed M&A activity rising to a three-year high, driven by middle-market deals, with 40% of companies globally expecting to pursue acquisitions in the next 12 months.

The survey found that appetite for expansion by African companies remained stable over the last half-year, with 23% of companies aiming to chase acquisitions over the next year, compared with 19% last year, said EY transaction advisory services global vice-chairperson Pip McCrostie.

The survey of more than 1 600 senior executives across more than 60 countries showed that almost 60% of the respondents expected deal volumes to increase further after a “relatively positive” year for M&A during 2014.

While the “M&A story” of 2014 had been the “return of the mega-deal”, the growth of M&A for the next year would see a shift to middle-market deals, with a focus on deals valued at $250-million and under.

Over 80% of those surveyed indicated their intention to embark on lower-value single deals aimed at bolstering the businesses' core capabilities, boosting market share, managing costs and improving margin growth.

“As cost efficiencies are paramount, for the vast majority, planned M&A activity will consist of bolt-on acquisitions that will complement their current business model,” McCrostie explained.

The recent multibillion-dollar mega-deals had increased confidence in M&A activity and had triggered transaction activity further down the deal chain, she added.

“The transformative deals hitting the headlines in 2014 are set to continue. However, the next chapter of the M&A story should be mid-market momentum taking deal activity to new heights.”

EY noted that a “further sign of bullish deal sentiment” was that more than half of the executives surveyed expected a rise in hostile and unsolicited approaches to M&A.

Meanwhile, 44% of the respondents now believed that the global economy had stabilised, compared with only 24% a year ago.

“Senior executives in Africa are equally confident, with their numbers rising to 54% from 27% a year ago,” McCrostie pointed out.

Countries such as the US, the UK, China, Japan, India and Australia were expected to be the key potential buyers, with Brazil, China, India, the UK and the US the current top five destinations of investment choice.

Nigeria and Mozambique emerged as the top investment destinations for African companies.