Sorry dealmakers and investment bankers. The record 2015 for global mergers and acquisitions belies uneven prospects for the coming year, said Matt Porzio, vice president of M&A Strategy at IntraLinks (IL) .
"We are seeing a deceleration in growth," said Porzio. "It's still growing, we are predicting 5.5% growth for the first quarter of 2016, but that's off of 9% growth the previous quarter and 11% growth the quarter before.
He said early-stage M&A activity is increasing at the slowest rate in 2.5 years as concerns over the global economic slowdown grow. According to Porzio, all the negative sentiment felt by dealmakers is "really weighing on deals."
And while mega-deals like the Marriott International (MAR) - Get Report acquisition of Starwood Hotels & Resorts Worldwide (HOT) for $12.2 billion announced Monday will continue to take place, they are less than 1% of the overall market, according to Porzio. As for the potential effects of a Federal Reserve rate hike in December on dealmaking, Prozio contends it's a "bit of a red herring."
"You are not really going to see too much effect with a quarter or half point move because we are still at historic lows for lending," said Porzio. "However, the uncertainty over how quickly rates will climb before they affect deals is weighing on the minds of dealmakers."
The global slowdown in M&A activity can be attributed to North America, according to Porzio, which declined by 3%, and Asia Pacific, which saw growth fall to only 3.2% compared with 34% in the previous quarter.
"China is definitely the big drag on that market, not to mention the global economy," said Porzio.
Finally, Porzio said the investment bankers he surveyed are still positive about the dealmaking environment. He said 43% of the dealmakers he surveyed are optimistic about the market going forward, but that is down from 51% last quarter and a high of 66% a year ago."
"The banks are starting to get worried about it," said Porzio. "They are starting to move resources around. There is still opportunity, though, for the long term."