Large transactions have driven mergers and acquisitions (M&A) activity in 2024, according to research from WTW’s Quarterly Deal Performance Monitor (QDPM). This trend reflects increasing confidence among dealmakers, despite ongoing geopolitical and macroeconomic challenges.
The number of deals valued over $1 billion has continued to rise, reaching its highest level in two years. In the last three months, 46 such transactions were completed, marking a 31% increase compared to the same period in 2023.
Megadeals, valued at over $10 billion, have also seen a resurgence, with 13 completed so far in 2024, compared to six during the same timeframe last year.
However, the total number of deals valued at over $100 million has shown a gradual decline. Data from WTW, in partnership with the M&A Research Centre at Bayes Business School, indicates that 157 deals closed in the third quarter of 2024, down from 188 in the last quarter of 2023.
Jana Mercereau (pictured above), head of Europe M&A Consulting at WTW, noted that the completion of several large deals this year suggests growing corporate confidence.
“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,” she said.
There has also been an increase in intra-sector deals, with companies focusing on acquisitions within their own industries. Intra-sector transactions rose from 57% of the total in the first quarter of 2023 to 75% in the latest quarter, indicating that corporates are taking advantage of market conditions to consolidate their positions.
Despite the increase in large deals, companies completing M&A transactions have generally underperformed in the wider market. During the third quarter of 2024, these companies fell short by -9.0 percentage points in terms of share price return.
Europe was the only region to outperform during the quarter, marking its first positive quarter since 2021, with a 2.1 percentage point improvement. Deal activity in Europe also increased, with 38 completions in the last three months compared to 32 in the same period last year.
UK buyers have outperformed the market index for two consecutive quarters, reflecting the broader trend in Europe.
Meanwhile, the M&A market in North America continues to face challenging conditions. Acquirers underperformed their regional index by -10.1%, marking the seventh consecutive quarter of underperformance. The region saw 81 completed deals, slightly down from 77 in the third quarter of 2023.
For the first time this year, buyers in the Asia-Pacific region also failed to deliver a positive M&A performance. Dealmakers in the region underperformed their index by -3.1 percentage points, with 30 deals completed between July and September.
In China, deal activity remains subdued, with just four transactions closed in the past three months. This represents a 96% drop from its peak in 2015 and the lowest level since 2011.
Mercereau added that while stabilising interest rates are helping to improve market confidence, dealmakers are still navigating significant geopolitical and economic uncertainties.
“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,” she said.
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