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M&A deal volume and value plummets by half

30 Jul 2020 / business Print

M&A deal volume and value plummets by half

LK Shields Solicitors LLP has been ranked as the seventh M&A firm in Ireland by deal count in the latest edition of Mergermarket’s Global and Regional M&A Report.

Mergermarket deliver M&A intelligence, data & research solutions and M&A league tables and have become an industry standard among investment professionals.

According to the new research, the initial effects of COVID-19 were only beginning to be felt across the global economy at the end of the first quarter.

However, its full impact manifested in the second quarter, where deal volume nearly halved from 4,308 deals to 2,630 in 2Q20.

In that space, deal values plummeted from $592.6bn to $308.9bn.

Deal volume fell 32% compared to the previous year (6,938 deals versus 10,155 deals), and deal values declined 53% year over year ($901.6bn compared to $1,907.5bn).

Activity

Such activity levels were reminiscent of 2008 and 2009. While the Global Financial Crisis remains the best historical comparison, COVID-19 has generated its own unique brand of mayhem, the report says.

Six of the largest financial services transactions announced in the first half of the year are investing or banking related, including Morgan Stanley’s $13bn bid for ETrade Financial, Kuwait Finance House’s $9.8bn offer for Ahli United Bank, and Franklin Resources $5.4bn bid for Legg Mason. 

Meanwhile, Aon’s $5.6bn plan to merge with Willis Towers Watson is an example of one of the few large transactions that has managed to move forward.

Technology, Media and Telecom (TMT) also increased its relative share of global M&A, as businesses became virtual and consumers were driven online.

Sectors impacted

ectors such as consumer and leisure have been impacted, falling a combined 64.3% by value and 66.1% by deal count year on year, and energy, mining & utilities was hit hard (declining 67.6% in value and 33.9% in volume) as commodities reacted negatively when energy demand dried up.

Construction was the only sector to turn in a positive number achieving a 5.7% increase in deal value despite a one-third decline in deal volume.

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