What US executives really think about the M&A outlook

Many US executives today are approaching their work with "professional skepticism"- questioning everything and assessing all of the evidence before making a decision. This strategy also applies to top executives, as they leverage a wide range of data to challenge what seems like the most positive of trends.

EY's 13th Capital Confidence Barometer finds US corporate executives are leveraging the opportunities the strong deal market brings, but are still being careful about making a move.

Cautious optimism

These executives may be upbeat, but they're bracing for challenges in 2016. So, they're considering the following before making a deal:

• Volatility in commodities and currencies.
• Corporate earnings' muted outlook in a constant low-growth environment.
• Geopolitical instability, including security risks, ongoing Eurozone turmoil, and the 2016 US presidential election.

Collectively, these views reflect how the C-suite and boardroom are running their businesses. And as contradictory as they may seem, the overall outlook on the deal market is positive; it shows future activity and general enthusiasm for deal making.

Pipelines are bigger now than they were six months ago; one-deal or two-deal pipelines now include threes and fours. And respondents cite the strong number and quality of M&A opportunities, and increased likelihood of closing a deal - indicators that are all up solidly from six months to a year ago. Yet virtually all of the respondents say they have canceled or walked away from a deal in the last 12 months, evidence that dealmakers are determined to wait for the right opportunity - and they are more confident now that they will find it.

The 13th Capital Confidence Barometer shows US executives are leading the way as the global market's professional skeptics. But across an entire market, this attitude is how an M&A flurry turns into a sustained boom, and how deal making creates a foundation for future growth.

Read more about the M&A outlook in EY's 13th Capital Confidence Barometer.

- Written by Rich Jeanneret, vice chair of the Americas, Transaction Advisory Services, EY.

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