The first quarter of 2015 was the busiest for mergers and acquisitions since 2008, according to research from global consulting firm Towers Watson. For the months ahead, both in terms of deal activity and deal value the outlook remains bright.
The research – run in partnership with Cass Business School – reveals that the merger-wave that started mid-2014 is being continued. According to Steve Allan, M&A Practice Leader EMEA at Towers Watson, the trend follows improved market conditions, as well the growing drive from corporates to turn to M&A as a key strategic and competitive driver. “There is a prevailing trend of outperformance for acquirers and consistency across sectors, with acquirers in general outperforming their industry peers”, comments Allan.
As a result, the M&A industry has faced “unusual high activity” in the first quarter of 2015, says Allan, with in particular the top end of the market flying high. So far 41 large deals (over $1 billion) have been closed – an all-time high for the corresponding period – and in addition two mega deals, worth over $10 billion, have already closed.
From a geographic perspective, Asia-Pacific was once again the outstanding performer last quarter, followed by Europe and North America. The study also shows that the performance of North America is rebounding following a quarter of underperformance and a comparatively lower outperformance in the quarter prior to that.
Looking forward, Allan says it is “impossible” to predict how long the current M&A boom will last, pointing at the backdrop of economic volatility, as well as political uncertainty. “In the UK the election is coming up in May, which is affecting what has traditionally been the world's second largest market. Of course, the first quarter of next year will have similar external pressures and influences with the US election then on the horizon. With this in mind, the current picture is very much a moveable feast. But, for the time being at least market confidence appears to remain high.”