On the heels of another post-recession record year in consumer and retail mergers and acquisitions (M&A), deal making will rise once again in 2017, accompanied by a rebound in valuations, according to A.T. Kearney’s new report, “Off to New Peaks in Uncertain Times.”

In 2016, 58 megadeals were valued at more than $1 billion, with consumer goods and food companies posting a 46% jump. The primary drivers of M&A—slow growth, consolidation, plentiful capital and strong balance sheets—will remain in place, but the report predicts a rise in deal values and a more complex political environment for cross-border M&A.

Based on interviews with C-level retail executives, 67% of whom anticipate an increase in M&A activity, along with analysis of retail transactions from the past 10 years, the report outlines three predictions—stratification of deals with higher valuations at the extremes, a bump in deals backed by private equity as a result of a record $1.5 trillion in “dry powder” and growth across global markets even in the face of rising nationalism and political uncertainty.

“While many of the circumstances that made 2016 a banner year for M&A will yield a similar level of deal making in 2017, several other factors have emerged that change the lens on the overall picture,” says Bob Haas, partner at A.T. Kearney, Chicago, leader of the firm’s global M&A practice and co-author of the report. “Increasing pressure on companies to grow revenues and profits has been matched by emerging political uncertainty, which will make cross-border transactions far more complex and potentially not as favorable as domestic and repatriation deals. At the same time, high multiples in developed countries will bring more balance in global growth.”

Consolidation through megadeals and mega-megadeals will remain crucial to improving bottom lines. Equally important, many small acquisitions will continue to drive innovation and new opportunities for growth. And, while Europe and North America accounted for 75% of last year’s total deal value, Europe attracted 45% of the total capital, reflecting the rise of the U.S. dollar against the euro and the pound—a trend that is likely to continue.

“In 2016, valuations cooled, with multiples down 21% from the previous year,” says Bahige El-Rayes, principal and co-author of the report. “However, going forward, we see deal multiples springing back as a result of mounting global optimism and the strong U.S. dollar. To navigate the cross-currents of shifts in market dynamics and political conditions, consumer and retail companies will need a strategic approach that accounts for the risk of economic nationalism in various parts of the world, starting with our own region, as well as a long-term view on the value created by M&A deals.”

To generate insights, A.T. Kearney analyzed more than 1,000 consumer and retail transactions from 2006-2016 spanning sectors such as food and beverage, grocery, pharmacy and personal care. The report also includes insights from C-level executives of consumer and retail companies based on a survey that sought their perspectives on trends in consumer and retail sectors and future M&A activity.