EY has recently launched its 11th Global Capital Confidence Barometer on merger and acquisition (M&A) activity, predicting healthy growth for M&A globally, which should take the market back to levels last seen before the financial crisis. The key findings of this study suggest that the following trends will start emerging over the short-term:

• Big increase in global companies expecting to do deals in the next 12 months
• Mid-market to drive next M&A wave with focus on core business
• Bulging M&A pipeline; expectations for further expansion doubles in six months
• Economic and valuations stability boosts M&A appetite after five-year slump

Much of 2014 has seen a big increase in multibillion-dollar deals at a global level. Increasing competition at the top end and a renewed focus on growing core businesses is set to fuel more middle-market deals; resulting in deal activity reaching 2006 levels. Almost two thirds (60%) of respondents expect deal volume to increase further in the next 12 months, even after a relatively positive 2014 for M&A.

The appetite for M&A is as high as it has been for more than three years, supported by relatively stable economic confidence. Meanwhile, deal pipeline - the biggest indicator of positive deal sentiments - has increased by 30% since April 2014. In addition, two thirds of executives expect M&A pipelines to expand further over the next year - this is more than double the number expecting expansion six months ago. A further sign of bullish deal sentiment sees more than half (53%) of respondents anticipating an increase in hostile and unsolicited approaches.

M&A activity is also supported by greater C-suite confidence levels in the global macroeconomic climate. The number of executives who view the global economy as stable has almost doubled in a year (from 24% to 44%). Geopolitical issues remain the biggest concern for 37% of executives, up from 30% six months ago. However, this concern is counteracted by a huge swing in positive sentiment regarding corporate earnings (43% to 77% in 12 months) and a trebling of confidence in short-term market stability (21% to 64% in 12 months).

The increasing influence of shareholder activism is helping to ensure that cost management remains a critical component of organic and inorganic growth strategies. Half (48%) of respondents say that cost reduction has been elevated on the boardroom agenda as a result of shareholder activists. The focus on costs is encouraging M&A to strengthen core operations. While the majority of companies are focusing on acquiring bolt-on businesses, more than a third (37%) still expect to undertake transformational deals.

Sentiment towards mature and emerging markets remains balanced. Countries such as the US, the UK, China, Japan, India and Australia are expected to be the key potential buyers. Meanwhile, Brazil, China, India, the UK and the US are the top five destinations of investment choice.

Sectors with the highest level of acquisitive intent are Automotive, Technology, Life Sciences, Telecommunications and Consumer Products.

The level of consolidation which is expected to take place on a global dimension may result in potential opportunities for Maltese entrepreneurs seeking to expand their borders and venture into new markets. The expected wave of acquisitions may potentially create additional pressures on micro and small businesses trying to compete domestically and beyond, resulting in a surge of businesses exploring their strategic options.