LONDON, 8 October 2020 — 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, reveals new 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 (formerly Cass), show that buyers outperformed the MSCI World Index1 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).
“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.”
Jana Mercereau,
Head of Corporate M&A Consulting, Great Britain at Willis Towers Watson
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:
“COVID-19 was a massive shock hitting economies and stock markets globally, yet instead of collapsing, M&A deals continue to defy gravity,” said Jana 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.”
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.
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.
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.