Global M&A Forecast: Performance to Bounce Back in 2019 Following Worst Year for Deal Making Since Financial Crash
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The Global M&A market continues to struggle to add value and buyer performance has been in steady decline since a 2015 peak, according to long-term data compiled by
"Global M&A performance peaked in 2015 and has been on the slide ever since. However, with the strategic imperative for deals remaining strong, we think there's a realistic chance that deal makers will do better next year as long as acquirers pick their targets carefully for growth."
To view the table click here. (https://www.willistowerswatson.com/en/press/2019/01/mna-performance-to-bounce-back-in-2019-following-worst-year-for-deal-making-since-financial-crash)
The figures in the table show the annual median-adjusted performance of all acquirers.
2019 M&A predictions
Based on short and long-term trends revealed by the data, as well as conversations with clients and colleagues,
* Things can only get better in 2019 - 2018 was a tough year for deal makers, who recorded their worst annual performance since the financial crash in 2008. Although complex headwinds remain, we are optimistic that the market will bottom out in 2019 and, supported by more clarity over the direction of the US administration and Brexit, improve the position of buyers in achieving better value from their deals.
* Fall in foreign deals - We expect to see a global decline in the number of cross-border deals due to regulatory constraints fueled by an increasing trend towards protectionism. This will lead to a more defensive strategy of domestic consolidation, for which some nations will be better equipped. The US domestic M&A market, for example, has traditionally shown itself to be very robust, so we expect volumes to remain stable as acquirers focus their firepower on domestic targets.
* No uptick expected in APAC - As well as a significant drop in deal volume,
* Outside interest in the
* Mega deals continue to struggle - There were 17 mega deals in 2018 (those valued at over
Global political uncertainty, from trade wars and growing protectionism to Brexit, will continue in 2019 and negatively impact mega deals in particular, as buyers will be cautious of transactions that take a long time to complete in a volatile deal making environment.
Mercereau said: "Political and economic uncertainty remain, impacting large cross-border deals and inevitably leading to some degree of volatility in terms of volume, but deal activity will prevail.
"Technology disruption, changing consumer behaviour, the slowdown in the growth of emerging markets and record cash reserves will drive companies to get into the M&A market. With many targets looking more expensive than they were during previous M&A peaks, such as in 1999 during the dot-com boom and in 2008 before the global financial crash, there has never been a more important time for decision makers to focus on target selection, diligence and execution before jumping into a deal if they are to give themselves the best chance of success."
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
* Deal data sourced from Refinitiv.
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