Global dealmakers achieved a third consecutive quarter of market outperformance in the first three months of 2023, according to research on completed deals from WTW’s Quarterly Deal Performance Monitor (QDPM)(1). Based on share price performance, companies making M&A deals outclassed the wider market(2) by +1.0pp (percentage points) for acquisitions valued over $100 million between January and March 2023. This follows a positive performance of +5.2pp in the previous quarter.
Run in partnership with the M&A Research Centre at The Bayes Business School, the data reveals the marginally positive performance of Q1 2023 has been driven by Asia Pacific deal activity, where buyers outperformed their regional index by +13.8pp. With 43 deals closed in Q1 2023, the region saw a 7% drop in volume compared to Q1 2022.
M&A deal activity also slowed significantly around the world, recording its lowest first quarter figures since 2015 with 157 deals completed worldwide in Q1 2023 compared to the corresponding quarter of 2022 (220 deals) and the final three months of 2022 (202 deals).
The slowdown in deal activity, however, has been far more pronounced in other regions. North American acquirers underperformed their index by -3.9pp with 79 deals closed between January and March, representing a sharp 32% decline in M&A activity compared to Q1 2022. Dealmakers from Europe, which continues to face more disruption and uncertainty, underperformed their index by -7.4pp with 30 deals completed in Q1 2023, down a substantial 39% in volume compared to Q1 2022. UK buyers underperformed by -1.4pp with a drop in volume reflecting the wider European trend.
Jana Mercereau, Head of Corporate M&A Consulting, Great Britain at WTW, said: “The sharp decline in M&A deals completing this quarter is the inevitable hangover effect following an astounding year in 2021, compounded by the macroeconomic and geopolitical headwinds that bruised the market last year.
“At the same time, M&A markets are far from closed. The number of deals we’re seeing in the pipeline has not dropped at all, but many have made slower progress towards completion, or have paused, as buyers adopt a ‘wait and see’ approach. Dealmakers remain fairly bullish and believe M&A activity will increase in the second half of 2023 as markets stabilise and interest rates level.”
WTW Quarterly Deal performance Monitor
1 The QDPM research for Q1 2023 includes deals completed between 1st January 2023 and 28th March 2023. We anticipate the current number of deals of 157 to increase by quarter end.
2 The M&A research tracks the number of completed deals over $100m and the share price performance of the
acquiring company against the MSCI World Index, which is used as default, unless stated otherwise.
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