Smaller Acquisitions on the Rise as Shareholders Challenge Value of Large High-Risk Deals

 

M&A – Quarterly Deal Performance Monitor: Q1 2018
Submitted by Willis Towers Watson, a partner organization of the M&A Leadership Council

Global M&A market performance was flat in the first quarter of 2018, according to Willis Towers Watson’s latest Quarterly Deal Performance Monitor (QDPM). Dealmakers on average underperformed the Index1 by 0.1pp (percentage points) in the last three months, with large (valued at over $1bn) and mega (value at over $10bn) deals especially struggling to add value, as well as cross border and cross regional deals.

Based on share-price performance, key findings revealed by the Willis Towers Watson global study in partnership with Cass Business School include:

• Asia-Pacific acquirers recorded the worst regional results with underperformance of 16.8pp, followed by 3.5pp underperformance by North American acquirers and marginal underperformance by European acquirers (1.3pp). While large deals underperformed the index by4.0pp, medium-sized deals (valued at under $1bn) bucked this negative trend to outperform the market by 0.4pp.
• Complex or slow deals underperformed the market, such as cross-border (3.7pp) and cross regional (4.3pp). In contrast, less complex deals such as domestic (0.4pp) and intra-regional (0.4pp) were able to outperform their respective indices.
• The quarter’s percentage of cross-regional (14%) and cross-sector deals (27%) are at their lowest since 2009 and 2015 respectively.