December 7, 2017
With the stock market soaring and his tax “reform” bill about to be passed by Republicans in the U.S. Congress, President Donald Trump has said he will be “unbeatable” in 2020. When it comes to mergers and acquisitions, however, global dealmakers are less sanguine, according to results of a poll released on December 4.
They fear that the man who co-wrote “The Art of the Deal” with Tony Schwartz may be unable to resist meddling in the M&A sphere.
In fact, based on the findings of the poll, conducted by law firm Herbert Smith Freehills in partnership with The Economist Group, Trump will have a detrimental impact on M&A over the next couple of years.
The two organizations got feedback this quarter from more than 200 senior executives and advisers involved in deal-making in Hong Kong, London, New York and Paris, Bloomberg reported.
The survey was taken before Senate Republicans narrowly passed their 500-page rewrite of the tax code and a repeal of the Obamacare individual mandate.
While 42% of global respondents said Trump’s impact will be negative; about 38% said the president actually has no impact and only 20% predicted a positive effect.
Despite the upbeat expectations of the latter respondents, already this year, deals in North America have declined almost one-third from the same period in 2016—to $1.1 trillion, bringing global volume down 11%, according to data compiled by Bloomberg.
Indeed, the Trump’s administration has demonstrated what can only be characterized as a zeal to push back on deals that it deduces will give companies too much power. For example, Bloomberg points out, AT&T’s $85.4 billion bid for entertainment giant Time Warner is facing an unexpected legal battle with the Justice Department.
Such political involvement in deals could cause problems, respondents to the poll said. Some 36% opined that it’s an “impediment and not welcome,” while 52% said intervention is an impediment but “necessary for wider social, economic and/or policy reasons,” according to the Herbert Smith survey. Only 12% said it’s not a significant impediment.
Research contact: The Economist Group (202- 650-6500)