Global M&A market "underperformed" in Q1 2019: Willis Towers Watson
The global mergers and acquisitions (M&A) market as a whole "underperformed" for the sixth consecutive quarter in the first quarter of 2019, according to Willis Towers Watson's latest report.
The decline was attributed to volatile deal-making environment impacted by global political uncertainty, from trade wars to growing protectionism.
According to the report, 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.
UK M&A performance also remained in line with the positive performance of European buyers, despite the continued uncertainty of Brexit.
Meanwhile, acquirers in North America showed an especially sharp decline, recording the region’s worst performance since the index launched, while acquirers from Asia-Pacific also underperformed their regional index.
The first quarter saw just 180 deals closed, which Willis said is the lowest quarter figure since Q1 2014. It added this is principally due to the continued decline in the number of Asian deals.
“European and UK players continue to lead the way in deal performance," said Jana Mercereau, head of corporate mergers and acquisitions for Great Britain. "Yet tough conditions made more acute by the U.S./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.”
Mercereau added: “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,” said Jana Mercereau.
“Growing cash reserves, technology disruption, the slowdown in the growth of emerging markets will continue to drive companies to get into the M&A market. At the same time, the market stress that characterised last year remains and many targets are now looking more expensive than they did during previous M&A peaks, such as in 1999 and 2008, making it as challenging as ever to deliver deals successfully.
“For dealmakers hoping to turn a corner later this year, there has never been a more important time for decision makers to focus on target selection, due diligence, integration and the people who will be instrumental to execution before jumping into a deal.”
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