The third quarter of 2014 has seen more merger and acquisition (M&A) deals completed globally than in any equivalent period for the last six years, according to research.
A total of 564 deals over a value of $100 million (€77.9 million) have been completed so far, and deal volumes are expected to make 2014 the strongest year for M&A since 2012.
The research from Towers Watson’s Quarterly Deal Performance Monitor (QDPM) also shows that acquiring companies around the world continued to outperform the market this quarter, with an average performance of 5.2 percentage points (pp) above a global index.
The study, run in partnership with Cass Business School, shows mid-cap deals are currently generating the highest return, performing 5.4pp above the index, compared to larger deals of over $1 billion averaging a 4pp return. “Slow” deals, taking 70 days or more to be completed, significantly outperformed the index at 10.5pp compared to “quick” deals at 3.5pp.
The Asia-Pacific region showed exceptionally strong results, as Asian acquirers achieved an outperformance of 14.1pp above their regional index. Asia-Pacific acquirers also surpassed those in North America and Europe in the three-year analysis, with a performance of 5.5pp above their regional index compared to 3pp and 2.7pp respectively.
North America led in terms of M&A volumes, with 121 deals completed in the third quarter of 2014 so far, amounting to almost 60% of global activity. However, buyers only outperformed the regional index by 2.8pp.
Overall, acquirers involved in cross-border deals had lower levels of outperformance than deals within a country’s borders, at 4.4pp against the index for cross-border deals compared to 9pp for domestic dealmakers this year to date.
Steve Allan, M&A practice leader for Europe, the Middle East and Africa at Towers Watson, says: “All in all this quarter’s results are encouraging and paint a picture of rapidly growing M&A activity in all sectors and across all regions.
“The most consistent theme we see in this research is the outperformance of acquirers across the board against global, regional and industry-specific indices. In addition, investors are becoming increasingly aware that those buyers, which do more than simply close deals and successfully integrate the acquired businesses, are more likely to produce sustained longer-term performance.”
©2014 funds europe
