Rebound in global M&A activity set to stay

THERE'S no doubt merger and acquisition (M&A) activity has started to accelerate over the past several quarters. Indeed, not only have we seen a number of high-profile potential tie-ups announced this year, but 2014 saw deals totalling more than US$3.5 trillion - an increase of 47 per cent over 2013. Our expectation is that there's plenty more to come.

What's driving this activity? First, we are starting to see a cash pile building up at the corporate level in many regions, including the United States, Europe, China and Japan. Some corporates, particularly in the United States, have begun using that cash for share buybacks and paying increased or special dividends.

But we have also seen corporates using cheap borrowing rates to boost those cash piles. We think this trend reflects an expectation of an improving global economy and increasing confidence at the strategic level, which could further boost M&A activity.