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Q2 2020 - COVID-19 drags North America M&A deals to lowest since 2010

Q2 2020 Quarterly Deal Performance Monitor

Mergers and Acquisitions
COVID 19 Coronavirus|Mergers and Acquisitions

By Jana Mercereau and Duncan Smithson | July 23, 2020

Lessons from previous crises tell us that there will be opportunities to make deals, with vast amounts of capital waiting to be deployed.

The impact of the COVID-19 pandemic on deal-making in the first six months of 2020 was significant but not unexpected, yet regional differences in deal performance and volume revealed by M&A data1 from Willis Towers Watson have been more dramatic.

Based on share price performance, the latest results from Willis Towers Watson’s Quarterly Deal Performance Monitor (QDPM), run in partnership with Cass Business School, show North America experienced the sharpest fall in M&A performance by some margin. Acquirers underperformed their regional index by -7.2pp (percentage points), with just 137 deals completed in H1 2020 (compared to 188 in H1 2019). This is the lowest number of North American deals for a six-month period since the study began in 2009.

In contrast, European buyers performed +10.2pp above their regional index in H1, based on an actual increase in deals completed (80 deals compared to 68 deals in H1 2019). This is also the first time in two years that Europe has recorded three consecutive quarters of positive performance. Meanwhile, U.K. acquirers performed +16.9pp above the index, with 15 deals in the first half of this year.

bar chart shows M&A quarterly analysis from 2008 for each quarter
Figure 1 M&A quarterly analysis – global performance

Asia Pacific dealmakers also fared better than their regional index in the first half of 2020, albeit with a more modest increase of performance of +3.1pp and based on a slight dip in volume (82 deals compared to 95 completed in H1 2019). Perhaps more significantly, the region’s outperformance in the last three months improved substantially, by +8.0pp based on 41 deals closed — the region’s first significant positive quarterly performance since late 2016.

bar chart shows the regional analysis of H1 2019 and H1 2020
Figure 2 M&A Regional Analysis — H1 2019 and H1 2020

Jana Mercereau, Head of Corporate Mergers and Acquisitions for Great Britain, said: “Global M&A activity tumbled to its lowest level in more than a decade in the wake of the COVID-19 outbreak, with most of this decline driven by North America. Economic uncertainty caused by the pandemic seems to have had a far greater negative impact on the ability of US companies to initiate and successfully complete M&A negotiations.”

“Before the severe disruption of COVID-19, dealmakers already faced uncertainty, including trade disputes, the threat of global recession, the rise of shareholder activism and a US presidential election on the horizon, making the deal performance and volume in some markets even more impressive,” said Mercereau. “While it is not possible to forecast the pandemic’s long-term impact on M&A, more turbulence seems inevitable.”

“What previous crises do tell us is that there will be opportunities to make deals, underpinned by vast amounts of capital still waiting to be deployed. Activity, partly driven by distressed M&A and non-core divestitures at bargain prices, will become more selective, deals will take longer and acquirers will need to be prepared for the duration and depth of their due diligence to increase, even as COVID-19 subsides.”


1 The M&A research tracks the number of completed deals over $100m and the share price performance of the acquiring company against the MSCI World Index, which is used as default, unless stated otherwise.


Head of Human Capital M&A, Great Britain

Senior Director, Mergers and Acquisitions

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