Global M&A activity remains on track for record-breaking year

LONDON, September 30, 2021 — 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 making M&A 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.

Deal volume in the last three months is the second highest 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 1041 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.

Gabe Langerak, Head of M&A, Western Europe at Willis Towers Watson, said: “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).

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.

Langerak said: “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.

“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.”

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 end of the quarter.
• All deals where the acquirer owned less than 50% of the shares of the target after the acquisition were removed, hence no minority purchases have been considered. All deals where the acquirer held more than 50% of target shares prior to the acquisition have been removed, hence no remaining purchases have been considered.
• Only completed M&A deals with a value of at least $100 million which meet the study criteria are included in this research.
• Deal data 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, 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.

Footnotes

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 1^st July 2021 and 24^th September 2021. We anticipate the current number of deals of 264 to increase by quarter end.