Global mergers and acquisitions (M&A) activity continues to build on the positive momentum seen at the beginning of 2024, with the second quarter’s completed deals surpassing those of the same period last year, WTW’s Quarterly Deal Performance Monitor (QDPM) reports.
In collaboration with the M&A Research Centre at Bayes Business School, the data shows that 166 global deals valued at over $100 million were completed in the second quarter of 2024, matching the number from the first quarter.
This figure exceeds the 130 deals closed during the same period in 2023, marking a 28% increase in volume.
The 35 large deals (valued over $1 billion) finalised in Q2 2024 represent the third consecutive quarterly increase, following 34 deals in Q1 and 32 in the preceding quarter.
Additionally, with four mega deals (valued over $10 billion) completed in Q2 2024, there have been nine mega deals so far this year, compared to only three in the first half of 2023.
Intra-sector acquisitions have been rising as a share of total M&A activity, increasing from 57% in Q1 2023 to 74% in the latest quarter, indicating a trend where sellers are divesting non-core assets and buyers are focusing on consolidating their own markets.
Jana Mercereau, Head of Europe M&A Consulting, WTW, commented: “Dealmaking in the first half of 2024 suggests the market may be ready to shake off the post-pandemic doldrums and return to pre-Covid levels and deal behaviour.”
“Rising market confidence on the back of expected interest rate cuts, improved financing conditions, low volatility and narrowing valuation gaps, will help uncork the deal backlog.”
WTW reports that compared to the strong equity market performance worldwide, which has made valuations more expensive, companies completing M&A deals have struggled to keep up with the broader market, underperforming by -9.3 percentage points between April and June 2024.
This figure is based on share price performance and continues the underperformance trend of acquirers from the previous quarter (-13.1 percentage points).
Despite these latest performance figures, the long-term trend over the past 15+ years still shows that acquirers have outperformed the market since the global financial crisis, by +1.4 percentage points.
The M&A market in North America remains challenging, with acquirers underperforming their regional index by -7.7%, marking the sixth consecutive quarter that buyers have lagged behind industry peers.
With 90 completed deals, this also represents a drop in volume compared to the first quarter of 2024, which saw 97 deals.
According to WTW, European dealmakers faced challenges in generating value from transactions, underperforming their regional index by -10.7 percentage points during the period from April to June 2024, with 34 deals completed, down from 37 in Q1 2024.
In contrast, the Asia Pacific market continued to fare better, consistently outperforming its index for ten out of the previous 11 quarters.
In the second quarter of 2024, buyers in the region exceeded their index by +1 percentage point, closing 38 deals, which marks an increase of seven compared to the previous quarter.
Notably, M&A activity in China, the world’s second largest economy, declined sharply to just three transactions in Q2 2024. Combined with nine deals in the first quarter, this represents China’s lowest level of M&A activity for the first half of a year since 2010.
Mercereau added: “Despite an upswing in deal numbers so far this year, the threat of stubborn inflation, high interest rates and uncertainty surrounding the US presidential election still risks puncturing dealmaker confidence and the fragile resurgence in M&A activity.”
“For this emerging M&A rebound to take hold, dealmakers will need to reduce their exposure to risk by exercising a high-degree of caution, focus on ‘best-fit’ deals and thorough due diligence that allows for extended timelines, combined with a plan for successful integration that maximises M&A value.”
