Global M&A activity failed to generate positive shareholder value in 2019, report finds

For the third year in a row, mergers and acquisition (M&A) activity globally failed to generate significant shareholder value for listed companies in 2019, according to a new report from Willis Towers Watson and Cass Business School at the City University of London.

Public companies that made acquisitions valued at more than US$100 million last year underperformed the MSCI World Index on average by 5 percentage points in 2019, according to the report. Based on share-price performance, companies that made similarly sized deals on average have failed to add value since 2017.

“Last year, the global picture for M&As by listed acquirers was patchy at best,” said Massimo Borghello, Willis’s head of corporate mergers and acquisitions, human capital and benefits for Asia-Pacific. “As regulatory, trade and economic uncertainties persist, the market is likely to continue at a slow pace in 2020, particularly as we do not expect a major pickup in China M&A volumes in the near term.”

Global deal making was at its slowest pace in six years last year, with 774 transactions valued at more than US$100 million worldwide in 2019. That compared with 904 deals worth more than US$100 million in 2018.

Forty-two per cent of those transactions failed to add shareholder value in 2019, according to the report.

In Asia-Pacific, acquiring firms underperformed the MSCI AC Asia-Pacific Index on average by 2.1 percentage points in the fourth quarter, according to the report.