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Press Release

Lessons from the 2008 crash urge long-term view to M&A deals in response to coronavirus

As the world faces an unprecedented crisis, lessons learned 12 years ago prove a valuable guide to M&A deal making

Mergers and Acquisitions
COVID 19 Coronavirus

April 7, 2020

ARLINGTON, VA, April 7, 2020 — The performance of the global M&A market has been in steady decline since a 2015 peak, with buyers now having failed to add value for 10 consecutive quarters, according to the latest data from Willis Towers Watson’s Quarterly Deal Performance Monitor (QDPM), run in partnership with Cass Business School.

Based on share price performance, acquirers have underperformed the Global Index1 by 2.1 percentage points (pp) in the first three months of 2020, and 4.9 pp over the past year, for deals valued over $100 million. North American buyers underperformed their regional index by 4.2 pp for Q1 2020. This contrasts with a longer-term view of performance, which shows M&A deals have still outperformed the market by 2.3 pp since the launch of the QDPM in 2008.

With 170 deals completed in the first three months of 2020, deal volumes are significantly down compared with the previous quarter and the lowest since early 2014. The study looks at deals that closed in the quarter; therefore, the impact of COVID-19 on this quarter’s volumes will most likely be focused on deals closed by Asian acquirers, with other regions likely to show the impact reflected in the number of deals closing in future quarters.

“All deals in this report are ‘pre-pandemic,’ having been completed, rather than announced, in the first quarter of 2020. While our results reveal a continuing downward trend in M&A deal performance and volume, fear and volatility driven by COVID-19 have sent financial markets in an accelerated tailspin and significantly disrupted the normal flow of M&A deals,” said Duncan Smithson, senior director, M&A, Willis Towers Watson.

“We know lessons learned from previous downturns can provide business leaders with a perspective on future recovery and growth. We must use this time as a catalyst for new and creative ways of working, which is likely to impact future deal making.”

The financial crisis 12 years later: Five lessons for investors

As the outbreak continues to move quickly, erratic markets are lending themselves to irrational decisions, with many deals in limbo. Yet, this study suggests M&A activity will not come to a complete standstill, as reduced share prices and many organizations looking to restructure will create new M&A opportunities, and all will need to find innovative ways to capture market share. Although today’s environment is different from what it was 12 years ago, five lessons appear relevant for business leaders planning their path through and beyond this current crisis:

  1. 01

    Focus on people.

    Business strategies are executed by people. Prior crises have shown organizations that can help keep their deal teams calm and focused, and that avoid jumping too fast at opportunities appearing too good to be true but move at pace when opportunities arise, will thrive. This is even more true today as the current health-driven crisis has implications that affect all of us personally and go beyond the financial. Leading organizations have a clear immediate focus on protecting and supporting their people, including their deal teams and their broader employee populations.

  2. 02

    Find advantage in adversity.

    In the current downturn, a wave of distressed, cheaper assets is likely to come to market. To turn adversity into opportunity, early and thoughtful asset allocation analysis is the only tried and tested remedy. Executing strategic investments well — in good times and bad — demands a cool head with buyers exercising cost discipline and financial prudence as well as detecting opportunities that offer reliable returns in reasonable payback periods.

  3. 03

    The near term is essential, but don’t lose focus on the longer term.

    During the 2007 – 2009 recession, companies prioritized short-term actions over longer-term initiatives, tending to act reactively rather than proactively. All companies must attend to short-term concerns to ensure viability, but those able to stay the course and focus on strategic long-term investments will lay the foundation for continued success once the crisis ends.

  4. 04

    M&A transactions will take longer and become less predictable.

    In 2008, a lack of available credit, plunging stock markets and worldwide financial crisis undermined companies’ ability to make acquisitions, ending five years of deal growth. Fast-forward 12 years and closing deals is just as complex, with deal makers working from home, site visits curtailed, leadership and expert meetings going virtual, debt financing harder to secure, and delays in regulatory approval as governments and regulators cope with the impact of COVID-19. In response, existing technologies such as virtual data rooms and video conference calls can be easily harnessed to facilitate the due diligence process. As this situation unfolds and more implications for M&A transactions arise, stakeholders will be required to show greater agility and creativity if they are to seize opportunities.

  5. 05

    Implementation plans and synergy goals must be reviewed.

    Deals closed as recently as Q1 2020 will need to be reviewed in the light of current conditions, and synergy playbooks for future deals will need to be reassessed. This reassessment will be in light of current market conditions as well as the broader brand and reputational risks of workforce restructuring and being open to accusations of taking advantage of a global health crisis.

“A long boom in financial markets has caused buyers to complain that so much money has been chasing too few deals, making attractively priced assets hard to find,” said Smithson. “For investors keeping their powder dry, now is when to look past short-term events and focus on the long-term value of companies. By doing so, plus going through the process of repricing risk and taking selective opportunities, and reviewing the target’s culture against their own, buyers will find genuine deal-making opportunities.”

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 average of the closing price of the final trading days of the quarter.
  • All deals where the acquirer owned less than 50% of the shares of the target after the acquisition are removed; hence, no minority purchases are considered. All deals where the acquirer held more than 50% of target shares prior to the acquisition are removed; hence, no remaining purchases are 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 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, optimize 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. Learn more at


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.

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