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

Run in partnership with the M&A Research Centre at Bayes Business School, part of City, University of London, the data reveal that 166 deals valued over $100 million were completed globally during the first quarter of 2024.

The compares with 150 M&A deals completed during the same period in 2023, representing an 11% increase in volume.

Following four consecutive quarters of decline, the volume of large deals (valued over $1 billion) may also be stabilizing.

With 34 large deals completed in the first quarter of 2024, this represents the second quarterly rise in a row, following 33 deals completed in the fourth quarter of 2023 and 32 during the previous quarter (see 4 stages of M&A deals).

Also, five mega deals (valued over $10 billion) closed in the first quarter of 2024 compared with just one in the first three months of 2023.

Companies completing M&A deals underperformed

Companies completing M&A deals underperformed

Compared with strong equity market performance worldwide, however, companies completing M&A deals underperformed the wider market by –13.1 percentage points for acquisitions valued over $100 million between January and March 2024 (see Top Cyber Risks that Can Threaten M&A Deals).

This figure is based on share price performance and continues the negative performance of the previous quarter (–13.6 percentage points).

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

2023 proved to be a very challenging year for acquisitions globally. And despite receding inflation fears, several factors are combining to have a chilling effect on dealmaking, including weak global economic growth, geopolitical instability and ongoing uncertainty surrounding the U.S. presidential election (see Insurance M&A Deals Outlook).

2024 Predictions for a turnaround in M&A completions

2024 Predictions for a turnaround in M&A completions

There may be some light at the end of the tunnel. Worries over a possible recession are dimming, and there are predictions for a turnaround in M&A completions, which are supported by a recent jump in IPO activity.

Private equity firms are facing heightened pressure to step up their M&A activity and utilize their committed capital.

In fact, we may very well see a more active year ahead given the apparent uptick in deal announcements in late 2023 and early 2024.

The M&A market in North America experienced a challenging first three months of the year, with acquirers underperforming their regional index for the fifth consecutive quarter, following 97 completed deals. The level of underperformance (–14.1 percentage points) was the region’s third worst ever since the WTW study began in 2008.

The global mergers and acquisitions landscape was notably active with several significant transactions across various industries.

Noteworthy among these was the U.S. banking sector, where ten bank deals were announced, matching the tally from January and bringing the year-to-date deal value to $939.3 million.

M&A market is anticipated to experience an upswing, driven by factors such as improved financial markets, pent-up demand and supply of deals, and the strategic need for companies to adapt and transform their business models (see Types of M&A and Ways of Structuring Deal).

The optimistic outlook is supported by recent trends indicating an increase in deal-making activity in some sectors, with a notable rebound in areas like energy, technology, and pharmaceuticals, among others.

Global M&A performance

Global M&A performance

European dealmakers also struggled to generate value from transactions. Having not outperformed their regional index since 2021, they underperformed during the period January to March 2024 by –9.2 percentage points, with 37 deals completed.

M&A performance was more robust in the Asia Pacific region, where more positive results have been achieved during the past two years, leading acquirers to record a first-quarter performance of +3.0 percentage points, with 31 deals completed.

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

It’s too soon to say whether there will be a full market recovery, but conditions for M&A activity are improving. Interest rates have stabilized and may decline at some point this year, and there is less competition for deals. As a result, last year’s wait-and-see attitude to dealmaking may soon be in the rearview mirror.

The first quarter 2024 is set to record the highest number of large M&A deal announcements in nearly two years, according to S&P Global.

February marked the third straight month in which four global M&A deals were announced with transaction values greater than $10 billion.

With eight such deals through the first two months, the first quarter is likely to have the highest number of $10 billion-plus transactions since the second quarter of 2022, when 11 were announced.

The pickup in large deals has brought a bit of measured optimism to the investment business. “We’ve seen some encouraging signs recently, but in the big picture, there’s still some challenges there,” JPMorgan Chase CFO Jeremy Barnum.

The broader M&A market saw several megadeals, indicating a resurgence in large-scale transactions.

Quarterly Deal Performance Monitor 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 mn that meet the study criteria are included in this research.
  • Deal data are sourced from Refinitiv.

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AUTHOR: David Dean – Managing director, Mergers & Acquisitions, WTW

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