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Global M&A market resets - will there be a change in investor confidence?

The devastating impact of Covid-19 on global M&A transactions, following a collapse in activity in Q2, is plain to see in the latest data. With the exception of Asia, where deal value has risen 23% in the year to date, every other market has seen both value and volume in steep decline. 

That’s particularly true in the U.S. and MENA where values have fallen by over 40% and 50% respectively when compared with the stellar levels of 2019.

Western Europe has seen value increase by 14% thanks to some large transactions in Q1, yet volume here is also down sharply.

Global M&A Q3 2020 snapshot

Change in the air?

But, as we head into a new season, are we seeing a significant change in activity and investor confidence?

That seems to be the evidence according to the figures, which show:

  • Deals between USD5 billion and USD10bn totalled USD307.9bn, up 23% compared to Q3 2019 and at a two-year high*
  • U.S. dealmaking totalled USD429.6bn during the third quarter of 2020, tripling Q2 2020 levels by value and registering a 27% increase in volume*
  • Asia's share of the global market is up to 31%, while Western Europe's share is 25% and the U.S. 35%

New criteria for deals

Our report supports this picture of a change in sentiment and activity.

It also shows that investors are applying new criteria when doing deals, focusing on demonstrably resilient sectors that have a good chance of staying that way and steering clear of those that don’t.

With the global economy in such a weakened state, there is a question mark over how sustained any bounce back will be.

The rest of the year will undoubtedly remain challenging, but there are reasons to be hopeful.

* Global Mergers & Acquisitions Review, First Nine Months 2020, Legal Advisors, Refinitiv, October 2020.

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