Global M&A performance rises modestly in Q124, large transactions begin to stabilise: WTW

Global mergers and acquisitions (M&A) activity saw a modest rise in completed deals during the first quarter of 2024 compared to the same period last year, according to research from WTW’s Quarterly Deal Performance Monitor (QDPM).

Data has revealed that 166 deals valued over $100 million were completed globally during Q124, a solid increase compared to 150 deals that were completed during the same period in 2023, representing an 11% increase in volume.

In addition, following four consecutive quarters of decline, the volume of large deals (valued over $1 billion) may also be starting to stabilise, as 34 large deals were completed in Q124, therefore making it the second quarterly rise in a row, following 33 deals completed in Q423 and 32 during the previous quarter.

WTW also highlighted that five mega deals (valued over $10 billion) closed in the first quarter of 2024 compared to just one in the first three months of 2023.

Compared to strong equity market performance world-wide, however, organisations completing M&A deals underperformed the wider market1 by -13.1pp (percentage points) for acquisitions valued over $100 million between January and March 2024.

WTW noted that this figure is based on share price performance and continues the negative performance of the previous quarter (-13.6pp).

But, despite these latest performance figures, the long-term 15+ year trend still shows M&A deals to have outperformed the market since the global financial crisis (+1.5pp).

Jana Mercereau, Head of Corporate M&A Consulting, Great Britain at WTW, commented: “In 2023, the global M&A market weathered an incredibly difficult year for acquisitions. While inflation fears have been receding, ongoing challenges such as weak global economic growth, geopolitical instability and uncertainty surrounding the U.S. presidential election will continue to impact dealmaking.

“At the same time, recession fears are fading, shifting consensus toward a soft landing, and predictions for a rebound in M&A completions are backed by the recent sharp rise in IPO activity. With trillions of dollars of dry powder, private equity firms are also under increasing pressure to get off the sidelines and deploy their committed capital. The uptick in completed deal activity in early 2024 certainly suggests a busier year ahead.”

Moving forward, the M&A market in North America is said to have experienced a “challenging first three months of the year,” with acquirers underperforming their regional index for the fifth consecutive quarter, following 97 completed deals.

From what we understand, the level of underperformance (-14.1pp) was the region’s third worst ever since the WTW study began in 2008.

Moving towards Europe, dealmakers also faced challenges when it came to generating value from transactions.

Having not outperformed their regional index since 2021, they underperformed during the period January to March 2024 by -9.2pp, with 37 deals completed.

However, M&A performance was far more robust across the Asia Pacific region, WTW noted,  where more positive results have been achieved during the last two years, leading acquirers to record a first quarter performance of +3.0pp, with 31 deals completed.

Deals over $100 million completed in China (the world’s second largest economy) fell to just nine during the first three
months of 2024, making it the country’s lowest level in over a decade and a fall of over 90% since Chinese corporate M&A deals peaked in 2015.

Mercereau added: “While it is too early to predict the timing of a full-throttle market recovery, with enduring headwinds such as heightened regulatory scrutiny and significant economic volatility, the conditions to lean in are improving. Interest rates are stabilising, there is less competition for deals and multiples have come down. With buyers standing ready to strike, last year’s ‘wait and see’ attitude to dealmaking is due a reset in the months ahead.”

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