M&A market sees some performance: WTW

The global M&A market recorded its first positive performance in three years for completed deals, despite the impact of the COVID-19 pandemic on dealmaking during 2020, according to M&A data from Willis Towers Watson.

Based on share price performance, the latest results from Willis Towers Watson’s Quarterly Deal Performance Monitor (QDPM), run in partnership with the M&A Research Centre at The Business School, show that buyers outperformed the MSCI World Index in the third quarter of 2020, with a performance of +1.5pp (percentage points) above the Index. This is the first positive performance by acquirers since the third quarter of 2017 (+0.7pp).

However, deal volumes are at their lowest level for over a decade (since Q3 2009), with just 121 deals completed in the last three months. The ongoing economic impact and uncertainty caused by the pandemic have continued to depress deal completions globally.

Jana Mercereau, head of Corporate M&A Consulting, Great Britain at Willis Towers Watson, said: “It is too early to interpret the flurry of announced deals in recent months as a sign that M&A is on the rebound. Our research on completed deals and their performance provokes a more cautious response. With the volume of completed deals at its lowest in a decade, performance of North American deals at rock bottom, fuelled by enduring pandemic, economic and political uncertainty, buyers need to be both bold and careful.”

Key findings from the QDPM data include four consecutive quarters of positive performance from Europe, underperformance in the North American market and positive performance in the first half of 2020 for Asia Pacific markets.

“COVID-19 was a massive shock hitting economies and stock markets globally, yet instead of collapsing, M&A deals continue to defy gravity,” said Mercereau. “Compared with previous economic cycles, the amount and diversity of capital available for M&A is extraordinary, assisted by historically low interest rates. Buyers who act decisively and with robust due diligence to exploit opportunities during this period of uncertainty could see higher returns than their industry peers and drive long-term growth.”