The global broking, advisory and solutions company’s Quarterly Deal Performance Monitor (QDPM) finds that North America was the site of the steepest fall in M&A dealmaking in the world, with 137 deals completed in the first half of the year, compared with the 188 observed in the equivalent period in 2019. Acquirers underperformed their local index by -7.2 per cent, and Willis Towers Watson said that the number of deals closed was the lowest for a half-year period in North America since 2009.
“Global M&A activity tumbled to its lowest level in more than a decade in the wake of the Covid-19 outbreak,” said Jana Mercereau, Head of Corporate Mergers and Acquisitions for Great Britain at Willis Towers Watson, “with most of this decline driven by North America. Economic uncertainty caused by the pandemic seems to have had a far greater negative impact on the ability of US companies to initiate and successfully complete M&A negotiations.”
Perhaps surprisingly, buyers in Europe performed at a level above their regional index in the same period – 10.2 per cent. This was the first time in two years that Europe observed three consecutive quarters of positive M&A activity. In the UK, buyers performed 16.9-per-cent above their local index, while the Asia-Pacific also performed above its local index.
Additionally, Willis Towers Watson’s report found that deals are taking longer, with the average time taken to complete a deal rising by eight per cent, from 144 days to 156 days, between the first half of 2019 and the first half of 2020. Six mega deals are also still in the process of being negotiated, and international deals were seen to generally outperform domestic deals.
“While it is not possible to forecast the pandemic’s long-term impact on M&A, more turbulence seems inevitable,” added Mercereau. “What previous crises do tell us is that there will be opportunities to make deals, underpinned by vast amounts of capital still waiting to be deployed. Activity, partly driven by distressed M&A and non-core divestitures at bargain prices, will become more selective, deals will take longer and acquirers will need to be prepared for the duration and depth of their due diligence to increase, even as Covid-19 subsides.”