Although the new administration has not filled government crucial positions like the FTC chair, corporate executives look forward to a robust deal environment over the next twelve months, according to a new survey.
Ernst & Young's semiannual Global Capital Confidence Barometer found that 79% of U.S. executives "expect to actively pursue M&A" in the next year, up from 57% one year ago and the long-term average of 47%.
The U.S. has seen the second-highest first-quarter deal activity in the past ten years, worth $3.66 billion, up 22% from last year. That high level of M&A activity can be expected to continue: 93% of the executives have 1-3 deals in the works.
While the promise of a business-friendly president has buoyed stock returns, President Trump has not yet followed through on many such campaign promises. Significant tax reform, including lowering the business rate to 15% from 35%, was one of the many legislative items Trump promised to introduce to Congress "and fight for their passage within the first 100 days" of his administration.
The hundred day marker comes the same week the Trump administration unveiled its new tax plan, on Wednesday. Markets barely budged at the announcement, but it's crucial to dealmakers: 46% of the executives surveyed are considering such tax reform when evaluating the deal landscape. The plan, for example, did not mention the 10% tax repatriation holiday Trump campaigned on, and National Economic Council director Gary Cohn said they still don't have specifics on repatriation. Cash stashed abroad, like Apple's (AAPL) - Get Apple Inc. (AAPL) Report billions, could boost M&A.
The president's opinions on antitrust matters are similarly murky. While he said on the campaign trail that he didn't approve of AT&T's (T) - Get AT&T Inc. Report planned $85 billion acquisition of Time Warner (TWX) , AT&T and Time Warner brass reportedly expect the deal to pass antitrust scrutiny without a hitch. Mergers like Allergan's (AGN) - Get Allergan plc Report abortive $160 billion tie-up with Pfizer (PFE) - Get Pfizer Inc. Report , quashed during the Obama administration, could likewise be back on the table, facilitated by a potential tax holiday. Many executives may feel they simply don't have time to wait for additional clarity.
"We are facing the most complex macroeconomic environment in recent memory - but despite the complexities, executives don't have the option to wait and see," said William M. Casey, EY Americas Vice Chair of Transaction Advisory Services, in a statement. "They must be cognizant of potential uncertainties, while actively maintaining their search for strategic opportunities to drive growth. The risk of being left behind is far too great to ignore - so the deals continue."
And many may not need clarity: 54% of U.S. executives surveyed believe that the Trump administration is creating, not hampering, additional M&A activity.
As Trump, the first president without government or military experience in American history, reaches this major landmark in his administration, the outlook still seems bright, according to EY: 95% of those surveyed saying that the United States economy will improve or remain stable over the next year.