The global mergers and acquisitions (M&A) market is continuing its decline despite strong numbers from Europe, according to the latest results from risk advisor Willis Towers Watson’s Quarterly Deal Performance Monitor (QDPM).
Confronted by a volatile dealmaking environment hit by global political uncertainty, from trade wars to growing protectionism, the global M&A market as a whole underperformed for an unprecedented sixth consecutive quarter, on average underperforming by -5.4 percentage points (pp) compared with their index in the past three months. This performance also represents a significant decline compared with the same period in 2018, according to the QDPM, which is produced in partnership with Cass Business School.
Cross-border and cross-regional outperformed the index by +0.9pp and +3.1pp and respectively.
Europe is the only region worldwide to have recorded a positive M&A performance in the first quarter of 2019, with European dealmakers outperforming their regional index by +2.8pp. UK M&A performance also remains in line with the positive performance of European buyers, with UK acquirers having consistently outperformed their region since 2008 despite the continued uncertainty of Brexit.
Acquirers in North America showed an especially sharp decline of -10.1pp, which is the region’s worst performance since the index launched, while acquirers from Asia-Pacific underperformed their regional index by -5.0pp.
“European and UK players continue to lead the way in deal performance. Yet tough conditions made more acute by the US-China trade disputes, the prospect of rising interest rates and tightening borrowing conditions, inevitably risk further dampening the M&A market and are likely to force buyers worldwide to be more selective than ever,” said Jana Mercereau, head of corporate mergers and acquisitions for UK at Willis Towers Watson.
“The poor results from the North American M&A market, traditionally shown to be very robust, reflect an increasing focus on targeting domestic acquisitions – fuelled partly by the US tax reform law changes. Experience is showing that this has so far proved unprofitable and dealmakers should instead be looking for the best deals, rather than limiting themselves to targets that take advantage of current domestic policy.”