Dealmakers Fear President Trump's ‘Negative Impact’ on M&A

Updated on
  • More than 40% of respondents see impediments to dealmaking
  • Global M&A volume is down 11% from same period last year
Bloomberg’s Aaron Kirchfeld reports on President Trump’s impact on merger and acquisition activity.

U.S. President Donald Trump has touted record stock markets and planned tax cuts as making him “unbeatable” for 2020. When it comes to mergers and acquisitions, dealmakers are less optimistic.

Trump will have a negative impact on M&A over the next one to two years, according to a poll from law firm Herbert Smith Freehills LLP in partnership with The Economist Group. The survey is based on feedback this quarter from more than 200 senior executives and advisers involved in dealmaking in Hong Kong, London, New York and Paris.

While 42 percent said Trump’s impact will be negative, about 38 percent said the president has no impact and only 20 percent predicted a positive effect. The survey was taken before Senate Republicans last week narrowly approved the most sweeping rewrite of the U.S. tax code in three decades, slashing the corporate tax rate and providing temporary tax-rate cuts for most Americans.

A flurry of deals in the past several weeks -- including CVS Health Corp.’s $67.5 billion takeover of Aetna Inc. announced on Monday and Broadcom Inc.’s $105 billion offer for fellow chipmaker Qualcomm Inc. -- have helped mask a slowdown in global M&A. So far this year, deals in North America have declined almost a third from the same period in 2016, to $1.1 trillion, bringing global volume down 11 percent, according to data compiled by Bloomberg.

Trump’s administration has shown a surprising appetite to push back on deals it deems as giving companies too much power. AT&T Inc.’s $85.4 billion bid for entertainment titan Time Warner Inc. is facing an unexpected legal battle with the Justice Department, for example.

Rising political involvement in deals is increasingly on dealmakers minds. Some 36 percent said that it’s an “impediment and not welcome,” while 52 percent said intervention is an impediment but “necessary for wider social, economic and/or policy reasons,” according to the Herbert Smith survey. Only 12 percent said it’s not a significant impediment.

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