Growing confidence in M&A despite geopolitical & macroeconomic headwinds: WTW

According to research from WTW, large deals have been at the forefront of M&A activity in 2024, reflecting growing confidence among dealmakers despite geopolitical and macroeconomic headwinds.

WTW’s research revealed that the volume of deals valued over $1 billion has continued to rise, reaching its highest level in two years with 46 transactions completed in the last three months, representing a 31% increase in volume compared to the same period of last year.

Megadeals have also reportedly bounced back, with 13 deals valued at over $10 billion completed worldwide for the year so far, compared to six transactions during the same period in 2023.

Jana Mercereau, Head of Europe M&A Consulting, WTW, commented, “A string of blockbuster deals completed this year signal a growing confidence in corporate boardrooms. While uncertainty remains, particularly with an upcoming US election, renewed optimism, the expectation of more interest rate cuts and improving valuations are positive signs for businesses and investors looking to cut a deal in the months ahead.”

However, despite an upswing in the number of large deals this year, WTW observed that companies completing M&A deals have “generally struggled” to compete with the wider market based on share price return, underperforming by -9.0 percentage points during the third quarter of 2024.

“Europe is the only region to buck this negative trend after bouncing back in the last three months. Dealmakers recorded the region’s first positive quarter since 2021 with an outperformance of +2.1pp. Furthermore, deal numbers were up in Europe, from 38 completions in the last three months, compared to 32 deals in the same period last year,” WTW said.

Meanwhile, according to the firm’s research, the M&A market in North America continues to experience tough trading conditions.

Acquirers are said to have underperformed their regional index by -10.1%, making it the seventh consecutive quarter that buyers have been outclassed by industry peers. With 81 completed deals, this also represents a drop in volume compared to the third quarter of 2023.

Buyers in the Asia Pacific region were unable to deliver an overall positive M&A performance for the first time this year, with dealmakers underperforming their regional index by -3.1pp, with 30 deals completed between July and September this year.

Mercereau continued, “While the impact of stabilizing interest rates on market confidence shouldn’t be underplayed, dealmakers remain challenged on multiple fronts as they continue to navigate significant geopolitical and economic uncertainty.

“If CEOs are to be more successful at unlocking long-term value from M&A, especially larger and more complex deals that face increased antitrust scrutiny, thorough due diligence combined with a plan for successful integration will prove critical in a resurgent market.”

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