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European dealmakers top global M&A rankings for second consecutive year

The downward trend of the global M&A market continues

December 17, 2019

Mergers and Acquisitions

As we move into a new decade, global dealmaking is likely to experience a continued hangover in 2020, with protectionism, a US presidential election and financial market volatility acting as a brake on M&A activity,” Jana Mercereau, Head of Corporate Mergers and Acquisitions for Great Britain at Willis Towers Watson.

LONDON, 17 December, 2019 — Europe is the only region worldwide to have recorded positive M&A performance in 2019, with European dealmakers marginally outperforming their regional index by +0.6pp (percentage points) over the last 12 months, according to the latest results from Willis Towers Watson’s Quarterly Deal Performance Monitor (QDPM), run in partnership with Cass Business School1.

North American and Asia-Pacific acquirers continue to struggle to unlock value from their deals, underperforming their regional indices during 2019 by -5.6pp and -3.2pp respectively.

The number of deals so far completed worldwide in 2019 is 699, significantly down compared to 2018 (904) and the market is on course to seeing the lowest annual volume since 2010 (688)2 . Sixty per cent of these deals have failed to add shareholder value in 2019.

Jana Mercereau, Head of Corporate Mergers and Acquisitions for Great Britain, said: “As we reach the end of the decade, 2019 shows a sharp decline in global deal volume, potentially the slowest pace in M&A activity since 2011, with the market having become a more nervous place and dealmakers having had to confront increasingly complex governance issues to complete transactions.”

Europe’s positive result was achieved despite continued poor performance from UK buyers (-3.7pp). During the same period, acquirers from North America underperformed their regional index by -7.1pp, and Asia-Pacific acquirers failed to replicate their outperformance in the third quarter and showed an underperformance of -1.0pp.

“European acquirers have not only outperformed their counterparts in North America and Asia-Pacific for the last two years, but also completed the fewest deals of any region in this period. This trend points to the benefits of a more disciplined market with corporations focusing on core competencies and prioritising strategic deals,” said Jana Mercereau. 

Based on share-price performance, acquirers worldwide have now on average failed to add value for nine consecutive quarters, underperforming the Global Index by -4.8pp over the past year, and -5.5pp (percentage points) in the last three months, for deals valued over $100 million. Based on share price performance, additional findings revealed by the study include:

  • Large deals - The annual volume year to date in 2019 is currently at 138 - the lowest annual volume since 2013.
  • China - The number of deals completed by Chinese dealmakers has dramatically declined year on year from a record high of 243 in 2015 to just 72 in 2019. This drop in Chinese-led deals is consistent with a wider trend for fewer M&A deals across Asia.
  • Domestic vs Cross-border - Domestic deals dropped significantly from 638 in 2018 to 448 in 2019. This compares to cross-border deal volumes which managed to hold up over the same period, with 266 completed in 2018 compared to 251 in 2019.
  • Closing speed - M&A transactions are taking longer to close, with deals completed so far in 2019 taking on average 141 days to execute compared to 120 days in 2018.
  • Long-term winners - Based on share price performance, companies engaged with M&A deals have outperformed the market by an average of +2.4pp since 2008.

”As we move into a new decade, global dealmaking is likely to experience a continued hangover in 2020, with protectionism, a US presidential election and financial market volatility acting as a brake on M&A activity,” said Jana Mercereau. “A drop in available deals, however, is likely to force buyers - armed with record levels of capital and access to debt – to be more selective and by applying a clear-cut strategic rationale and thorough due diligence many will succeed in bucking the global negative trend to execute quality deals that add real value.

“The recent election results in Britain have already had an immediate positive impact on the British currency. We may now see a resurgence of activity both from and in Britain given the decreased level of uncertainty,” added Jana Mercereau.

Willis Towers Watson QDPM methodology

  • All analysis is conducted from the perspective of the acquirer.
  • Share-price performance within the quarterly study is measured as a percentage change in share price from six months prior to the announcement date to the end of the quarter.
  • All deals where the acquirer owned less than 50% of the shares of the target after the acquisition were removed, hence no minority purchases have been considered. All deals where the acquirer held more than 50% of target shares prior to the acquisition have been removed, hence no remaining purchases have been considered.
  • Only completed M&A deals with a value of at least $100 million which meet the study criteria are included in this research.
  • Deal data sourced from Refinitiv.

About Willis Towers Watson M&A

Willis Towers Watson’s M&A practice combines our expertise in risk and human capital to offer a full range of M&A services and solutions covering all stages of the M&A process. We have particular expertise in the areas of planning, due diligence, risk transfer and post transaction integration, areas that define the success of any transaction.

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving in more than 140 countries and markets. We design and deliver solutions that manage risk, optimise benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential.

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