Q3 2021 Quarterly Deal Performance Monitor
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QDPM Methodology
Global acquirers are on track to record their first annual market outperformance since 2016, according to latest results from Willis Towers Watson’s Quarterly Deal Performance Monitor (QDPM). Companies closing deals have on average outperformed the World Index1 by +2.3pp (percentage points) during the first nine months of 2021, boosted in particular by strong performances in the first two quarters.
The share price returns have been adjusted to Index returns over the corresponding period. The MSCI World Index is used as default, unless stated otherwise.
Deal volume in the last three months is the second highest ever recorded for a third quarter, with 264 deals over $100m in value completed in Q3 20212, and more than double the volume of M&A deals compared to the corresponding quarter in 2020. At this pace, with 748 deals completed so far this year, total M&A activity for 2021 could overtake the all-time high of 1,041 completed deals recorded in 2015, according to data compiled by Willis Towers Watson and the M&A Research Centre at The Bayes Business School (formerly Cass).
The surge in deals has primarily been driven by a sharp rise in activity by North American buyers, responsible for more than half of all deals completed globally during Q3 2021.
As economic uncertainty melts away from the impact of 2020 lockdowns, companies have embarked on an unprecedented deal spree this year looking to bulk up and address the vulnerabilities it exposed.
With the deal pipeline at such record levels, it is difficult to see M&A activity slowing in the near term. While the potential is strong, however, the challenges of price, regulation and pressure to deliver target returns leave little or no margin for error.
The M&A data for Q3 2021 revealed acquirers in both North America and Europe struggling to match the positive results achieved in the first six months of 2021, underperforming their regional Indices by -7.2pp and -7.6pp respectively. During the same period, only Asia-Pacific buyers managed to outperform their regional Index with a strong quarterly result (+27.8pp) and their best since Q4 2016 (+72.8pp).
The share price returns have been adjusted to Index returns over the corresponding period. The MSCI World Index is used as default, unless stated otherwise
Nearly a third (215) of the 748 deals completed in the last nine months have been large – valued at over $1 billion. With this trend expected to continue into the final quarter, activity at this level is likely to breach new highs, building on the record-breaking streak from the start of 2021.
After a period of significant volatility, more companies willing to undertake larger deals signals a more stable market, with the forces driving global strategic activity still in place, including a positive economic outlook, an abundance of dry powder and access to inexpensive debt.
“Competition remains intense, more robust scrutiny of large M&A is expected, and deals are becoming more complicated. ”
Jana Mercereau
Head of Corporate M&A Consulting, Great Britain Willis Towers Watson
At the same time, competition remains intense, more robust scrutiny of large M&A is expected, and deals are becoming more complicated as companies try to acquire new capabilities often far removed from their traditional core business. As M&A transactions grow in quantity and size, integration planning starting in due diligence will become ever more important for buyers looking to lock in gains and achieve transformative growth.
1 The M&A research tracks the number of completed deals over $100m and the share price performance of the acquiring company against the MSCI World Index, which is used as default, unless stated otherwise.
2 The QDPM research for Q3 2021 includes deals completed between 1st July 2021 and 24th September 2021. We anticipate the current number of deals of 264 to increase by quarter end.
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| Q3 2021 - Global M&A activity remains on track for record-breaking year | 1 MB |
