Despite the growth in global geopolitical risks, merger and acquisition (M&A) markets continued to prove highly resilient, with a 19% year-on-year increase recorded in the number of deals valued at between $1-billion and $5-billion, international law firm Allen & Overy’s (A&O’s) latest M&A Insights Report for 2017 reveals.

However, the number of so-called megadeals – valued at over $5-billion – decreased by 13% year-on-year.

“We are experiencing the second-longest bull market on record as investors take heart from a number of powerful fundamentals, strong corporate cash balances, buoyant equity markets and continued ready availability of debt financing, despite gradually increasing interest rates in key markets.

“Many companies have emerged from post-crisis doldrums in better health, often more efficient and with a new strategic purpose,” said A&O Corporate global co-head Richard Browne.

From a regional perspective, in line with several key markets, the US has seen a sharp decline in deal values this year, with a marked drop of 26% on the fourth quarter of 2016, but deal volumes were heading for the highest level ever, up 13% year-on-year for the fourth quarter.

The reverse is true in Western Europe, with values up 34% and volumes down 10%, reflecting continued strong outbound and domestic activity.

The report, which is based on data compiled by Thomson Reuters, particularly highlights Italy as a country which has seen a boom in M&A transactions, propelling it to sixth place in the rankings of cross-border targets and eighth place in the top 20 acquirer nations.

Increased regulation and scrutiny of data was also highlighted in the report, with A&O London partner Jane Finlayson-Brown noting that data was an increasingly important commodity, with dealmakers now facing a perfect storm of heightened incidences of data breaches, greater public awareness and a sharp tightening of regulation on how data is stored and protected. 

“These issues will have an increasing bearing on deal value and success moving forward.”