M&A – Quarterly Deal Performance Monitor: Q4 2018 and 2019 predictions

Performance to bounce back in 2019 following worst year for deal making since financial crash

January 21, 2019
| United Kingdom, United States

M&A – Quarterly deal performance monitor Q4 2018

Despite acquirers recording their weakest ever annual performance since 2008, 45% of deals completed in 2018 were still able to outperform the market.

The global M&A market underperformed for an unprecedented fifth consecutive quarter, making 2018 the worst performing year for deal making since 2008 and the first year that acquirers have underperformed for all four quarters, according to the latest results from Willis Towers Watson's Quarterly Deal Performance Monitor (QDPM).

The M&A research, run in partnership with Cass Business School, tracks the number of completed deals over $100m and the share price performance of the acquiring company against the MSCI World Index. The findings revealed that over a one-year rolling period acquirers have underperformed the Index by 2.8pp (percentage points).

2019 M&A predictions

Year on year, M&A has proven to be a successful strategy for deal makers to achieve growth and move into new markets. Last year was no exception despite exceptional political and economic uncertainties. We look now to 2019, what will this new year bring? We are excited to present our 2019 predictions for M&A, full analysis can be found in the attached report. The highlights are as follows:

  • For those optimists out there you will be pleased to hear that we believe things can only get better in 2019. The market will respond positively to more clarity on US administration and Brexit.
  • Deal makers will favor domestic M&A with cross-border deals slowing due to regulatory constraints fueled by an increased trend toward protectionism. An exception might be European cross-border M&A.
  • Whilst there is continued interest in China, we expect M&A activity from Chinese companies to be muted in 2019 which in turn will impact deal volumes across the Asia-Pacific region.
  • Despite Brexit, the UK will remain one of the most popular M&A target nations.
  • Mega deals (those valued at over $10bn), are difficult and many that closed in 2018 did not achieve value for shareholders. This is a trend which will continue into 2019.

Please read the full report, download here to learn more.