It has not been a good quarter for the global M&A market, according to a new study from Willis Towers Watson.
In the third quarter of 2019, the global M&A market recorded its second worst performance since the 2008 launch of Willis Towers Watson’s Quarterly Deal Performance Monitor (QDPM). According to the study, global deals valued over $100 million have failed to add value to share-price performance for eight consecutive quarters.
North America recorded the worst performance of all regions, with companies there struggling to unlock value from their deals for an eighth consecutive quarter. In Europe, acquirers ended a run of nine consecutive quarters of positive results.
Asia-Pacific is the only region worldwide to have recorded a positive M&A performance in the third quarter of 2019, with dealmakers in this region ending a run of 10 consecutive negative quarters.
Overall, the study found that 59% of deals completed year-to-date have failed to add value.
Additionally, the report indicated that the annual number of deals is expected to fall for the fourth consecutive year – although deal volume was marginally on the rise in the third quarter of 2019 compared to the previous quarter due to an increase in North America and Asia-Pacific transactions.
The study also found that M&A transactions are taking longer to close, with deals completed in the first nine months of 2019 taking an average 140 days to execute compared to 119 days for the same period in 2018.
“As deal volume continues its annual downward trend, tough conditions and intensifying competition for an ever-shrinking pool of targets further ramp up the stakes for CEOs under pressure from increasingly vocal shareholders,” said Jana Mercereau, head of corporate mergers and acquisitions for Great Britain at Willis Towers Watson. “[Although] the past 10 years have been relatively good times for dealmakers, now trade wars, Brexit, weakness in China’s economy and forecasts for slower growth are weighing down sentiment in capital markets, indicating more difficult times ahead.”