Global rebound in M&A activity sets stage for busy final quarter

ARLINGTON, VA, October 9, 2023 — Global mergers and acquisitions (M&A) activity increased in the third quarter of this year, according to research on completed deals from WTW’s Quarterly Deal Performance Monitor (QDPM). Global volume rose by 16%, with 151 deals over $100 million in value completed during July to September, making it the busiest quarter of the year so far.^[1]

Despite this latest upswing in deal activity, large deals (valued over $1 billion) have continued to see a steady decline in volume that began in 2021, with 32 deals closed during July to September 2023. For the same quarters in 2022 and 2021, 50 and 67 large deals were completed, respectively.

David Dean, managing director, Mergers & Acquisitions, WTW, said: “Rising interest rates translating to higher financing costs, increased antitrust scrutiny and a more cautious attitude from lenders have been driving the sluggish pace of bigger, more complex deals.

“While it is too early to call a comeback, the recent rebound in deal volume across regions indicates pent-up demand, with M&A activity anticipated to improve as dealmakers enter the final and busiest quarter of the year.”

Run in partnership with the M&A Research Centre at the Bayes Business School, the WTW data reveal macroeconomic pressures have taken their toll on deal performance. Based on share price performance, buyers underperformed the wider market by –8.7 percentage points for deals completed between July and September 2023. This is the worst quarterly performance since this study began in 2008.

The M&A data show that Asia Pacific continues to be the only region to outperform its regional index. For the ninth consecutive quarter, buyers in the region outclassed their index with a positive performance of +7.6 percentage points, with 35 deals closed in the third quarter of 2023. This also represents an increase of five deals compared with the previous quarter.

Acquirers from both North America and Europe saw a similar increase in deal activity. North America buyers completed 77 deals during July to September this year, which is a 12% increase over the second quarter. Meanwhile, buyers from Europe completed 32 deals in the third quarter of 2023, up from both the first and second quarters. In contrast to the Asia Pacific region, however, acquirers in North America and Europe underperformed their regional indices by –10.3 percentage points and –3.4 percentage points, respectively.

With the exception of the energy/power and industrials sectors, where M&A deals recorded a marginally positive performance of +1.5 percentage points and +1.9 percentage points, respectively, compared with non-acquirers in their markets for the year to date, all other industries, including high technology (–18.5 percentage points) and financial services (–7.2 percentage points) have underperformed.

Dean said, “There is almost no margin of error in M&A deals today. With M&A activity widely expected to pick up pace, companies need to be ready to identify the right targets, how they fit in their business, navigate accelerated due diligence processes driven by aggressive timelines and above all ensure the right people are integrated to maximize M&A value.”

WTW 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 that meet the study criteria are included in this research.
• Deal data are sourced from Refinitiv.

About WTW M&A

WTW’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 WTW

At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.

Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you.

Footnote

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