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Press Release

No sign of recovery as global M&A market endures second worst performance on record

Mergers and Acquisitions
Mergers and Acquisitions

October 2, 2019

Based on share-price performance, acquirers have failed to add value for eight consecutive quarters.

LONDON, Wednesday 2 October, 2019 — The global M&A market recorded its second worst performance since the launch in 2008 of Willis Towers Watson’s Quarterly Deal Performance Monitor (QDPM), run in partnership with Cass Business School.

Based on share-price performance, acquirers have failed to add value for eight consecutive quarters, underperforming the Global Index by -6.4pp (percentage points) in the last three months, and -4.6pp over the past year, for deals valued over $100 million.

Asia Pacific is the only region worldwide to have recorded a positive M&A performance in the third quarter of 2019, with dealmakers in this region surpassing their local index by +0.8pp, ending a run of 10 consecutive negative quarters.

European acquirers ended a run of nine consecutive quarters of positive results by underperforming the regional index by -6.7pp. The continent’s efforts will have inevitably been impacted by the worst ever third quarter result by UK acquirers of -20.0pp (based on only seven completed deals).

Meanwhile, North American companies struggled to unlock value from their deals for an eight consecutive quarter, recording the worst performance of all regions with an underperformance of -6.9pp.

The annual number of deals is expected to fall for the fourth consecutive year, although deal volume was marginally on the rise in Q3 2019 compared to the previous quarter due to an increase in North America and Asia Pacific transactions. Fifty-nine per cent of deals 333 completed year-to-date have failed to add value.

Despite easy wins being few and far between, two out of five deals have successfully navigated the market volatility to outperform the benchmark.”

Jana Mercereau
Head of Corporate Mergers and Acquisitions for Great Britain

“As deal volume continues its annual downward trend, tough conditions and intensifying competition for an ever-shrinking pool of targets further ramp up the stakes for CEOs under pressure from increasingly vocal shareholders,” said Jana Mercereau, Head of Corporate Mergers and Acquisitions for Great Britain. “Despite easy wins being few and far between, our research still shows two out of five deals have successfully navigated the market volatility, decreasing valuations, and macroeconomic and political uncertainty to outperform the benchmark.”

Based on share price performance, additional findings revealed by the study include:

  • Large deals (valued at over $1bn) had their lowest quarterly volume since 2009 and are on course to have the lowest annual volume since 2013.
  • Seven mega deals (value at over $10bn) closed in Q3 2019, compared to none in the last quarter and five in Q1 2019, although performance on average was weak.
  • M&A transactions are taking longer to close, with deals completed in the first nine months of 2019 taking on average 140 days to execute compared to 119 days for the same period in 2018.

“The past ten years have been relatively good times for dealmakers, now trade wars, Brexit, weakness in China’s economy and forecasts for slower growth are weighing down sentiment in capital markets, indicating more difficult times ahead,” said Jana Mercereau. “The instinct for dealmakers during the next downturn may be to retreat to the sidelines, with deals often taking longer to close and being more complex. Our experience instead suggests that a weak economy should be seen as an opportunity, as well-executed deals rooted in a clear-cut strategic rationale, thorough due diligence and sound financial considerations, will create value in both good and challenging economic conditions.”

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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