Deal makers recorded the third-highest half-year volume of deals completed on record, though volatility risks M&A disruption during months ahead
- Global M&A volumes hit third-highest total on record for opening six-month period.
- Asia Pacific M&A is outperforming the rest of the world.
- North America M&A is underperforming by –6.1 percentage points, Europe M&A by –5.9 percentage points.
- Deals in 2022 are taking longer to complete compared with last year.
Although deal activity has slowed from its record-setting 2021 pace, when 484 deals were completed in the first six months, M&A volumes remain buoyant this year with the number of transactions continuing to exceed pre-pandemic levels, according to the QDPM data.
Deal performance, in contrast, has struggled to defy gravity and has clearly been affected by market volatility. Amid soaring inflation, rising interest rates, geopolitical tensions and the ongoing COVID-19 pandemic, buyers underperformed the wider market1 by –4.8 percentage points, based on share price performance, during the first six months of 2022.
The average time to close a deal has also increased in 2022, with 60% of transactions during the first six months taking over 70 days (the long-term average time between announcement and closing), compared with 54% in the first half of 2021. In contrast with last year when competition for assets was fierce and buy-side deal teams had to work with compressed diligence periods to stay competitive in the bid process, market volatility in 2022 has raised the stakes for buyers, advocating caution and increasing due diligence.
“While there has been a slowdown this year, following the record-setting pace of 2021 thanks in part to booming markets and widespread stimulus measures during the pandemic, the pipeline remains very healthy, even with deal execution becoming harder due to increased volatility and macro concerns,” said
The number of megadeals (valued over
All regional acquirers, except those in
Smithson said: “Debt is still relatively cheap by historical standards, and abundant dry powder from private equity firms and SPACs [special purpose acquisition companies] raised during 2021 ensure the appetite for deals remains strong, although clear risks lie ahead. Geopolitical uncertainty, rising interest rates and supply chain disruptions create a volatile mix that will make deals more complex, take longer and require a new focus from buyers on how to improve the odds of success.
“At a time when change fatigue is at an all-time high, with the pandemic in its third year, clear and consistent communication to employees and the market will prove more critical than ever to preventing greater disruption and confusion, and ensuring deals get over the finish line, create value and drive long-term growth.”
WTW QDPM methodology
- All analysis is conducted from the perspective of the acquirer.
- Share-price performance within the quarterly study is measured as a percentage change in share price from six months prior to the announcement date to the end of the quarter.
- All deals where the acquirer owned less than 50% of the shares of the target after the acquisition were removed; hence, no minority purchases have been considered. All deals where the acquirer held more than 50% of target shares prior to the acquisition have been removed; hence, no remaining purchases have been considered.
- Only completed M&A deals with a value of at least
$100 million that meet the study criteria are included in this research. - Deal data sourced from Refinitiv.
About WTW M&A
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eemerman@eaglepr.com
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1 The M&A research tracks the number of completed deals over
Source:
2022 GlobeNewswire, Inc., source