Large deals have been at the forefront of M&A activity in 2024, according to research on completed deals from leading global advisory, broking and solutions company WTW's Quarterly Deal Performance Monitor (QDPM), reflecting a growing confidence among dealmakers despite geopolitical and macroeconomic headwinds.
The volume of deals valued at over $1 billion has continued to rise steadily, reaching its highest level in two years with a healthy stream of 46 transactions completed in the past three months. This represents a 31% increase in volume compared with 12 months ago. Megadeals have also bounced back, with 13 deals valued at over $10 billion completed worldwide for the year so far, compared with six transactions during the same period in 2023.
In contrast, the number of all deals valued at over $100 million has seen a gradual decline from 188 deals closed in the final three months of 2023 to 157 in the third quarter of 2024,[1] according to the data, which is run in partnership with the M&A Research Centre at Bayes Business School.
"Confidence inside corporate boardrooms for large M&A deals is on the upswing. And despite continued uncertainty, particularly with the forthcoming U.S. election, we are seeing positive signals for deals in the coming months, given renewed optimism, the expectation of more interest rate cuts and improving valuations," said David Dean, managing director, M&A Consulting, WTW.
Acquisitions completed within the same industry sector (intra-sector deals) have also been rising as a proportion of overall M&A, compared with cross-sector acquisitions. Since the start of 2023, intra-sector deals increased from 57% of the total in the first quarter of 2023 to 75% in the latest quarter. This indicates a trend for corporates looking to take advantage of depressed or distressed circumstances to consolidate their own markets.
Despite an upswing in the number of large deals this year, companies completing M&A deals have generally struggled to compete with the wider market based on share price return, underperforming by –9.0 percentage points during the third quarter of 2024.
Europe is the only region to buck this negative trend after bouncing back in the past three months. Dealmakers recorded the region's first positive quarter since 2021 with an outperformance of +2.1 percentage points. Furthermore, deal numbers were up in Europe. There were 38 completions in the past three months, compared with 32 deals in the same period last year. Reflecting the wider European trend, U.K. buyers have now outperformed the index for two consecutive quarters.
In contrast, the M&A market in North America continues to experience tough trading conditions. Acquirers underperformed their regional index by –10.1%, making it the seventh consecutive quarter that buyers have been outclassed by industry peers. Although 81 completed deals in the third quarter does represent a marginal upturn in volume compared to the same period in 2023 (77 deals).
For the first time this year, buyers in the Asia Pacific region were also unable to deliver an overall positive M&A performance, with dealmakers underperforming their regional index by –3.1 percentage points, with 30 deals completed between July and September this year. With just four transactions closed in the past three months, deal activity in China remains 96% below its peak in 2015 and at its lowest level since 2011.
"Dealmakers still face many challenges as they continue to navigate significant geopolitical and economic uncertainty. For CEOs to be more successful at unlocking long-term value from M&A, especially megadeals facing increased antitrust scrutiny, careful due diligence along with a strategy for successful integration will prove critical in a resurgent market."
Footnote
1 The M&A research tracks the number of completed deals over $100 million and the share price performance of the acquiring company against the MSCI World Index, which is used as default, unless stated otherwise.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.