North American acquirers outperformed their peers in the second quarter of 2013, according to data in the latest edition of Towers Watson’s (NYSE, NASDAQ: TW) Quarterly Deal Performance Monitor, which analyzes the post-deal performance of completed M&A deals with a value of at least $100 million. The research, run in partnership with Cass Business School in London, also showed that North American acquirers continue to strengthen their dominance in M&A activity, as the number of deals completed in the second quarter rose slightly. In the second quarter, North American acquirers delivered an impressive performance, outperforming their regional index by 6.2 percentage points (pp). European acquirers outperformed their peers by 5.3 pp, while acquirers in the Asia Pacific region performed just below their regional index (–1.1 pp). For the first half of 2013, North American acquirers outperformed their regional index by 5.5 pp, pointing to a successful first six months of the year. European acquirers outperformed their regional index by 3.0 pp over the six-month period, while Asia Pacific acquirers outperformed their index by 4.4 pp. “The latest statistics reveal an interesting picture of the developing M&A landscape and are very much a continuation of recent trends we have been seeing,” said Mary Cianni, global leader of M&A services at Towers Watson. “Although overall market volume has declined slightly, North American and European deal makers have enjoyed some success, suggesting that companies are being increasingly selective in bringing the best deals forward. Even in tough times, if a deal has real value, companies will proceed.” The study found that the volume of deals completed in North America increased slightly during the second quarter, to 91, versus 84 deals completed in the first quarter. Globally, M&A volume declined for the second consecutive quarter of 2013. “Globally, North America has been the only region to maintain deal volumes through the first half of the year. This consistency dates back to the past year, and acquirers are now reaping the rewards of greater market confidence. The latest data confirm the growing dominance of North American acquirers, which now account for roughly 60% of global M&A activity,” said Cianni.
Market SectorsDuring the second quarter, most industry sectors showed above-market returns for acquirers. One exception was the financial sector, where in a reversal of a well-established trend, deal makers underperformed their industry index in the second quarter. “The underperformance of deal makers in the financial sector is a notable development and could indicate we are approaching an end to the period of fire sales and the start of a more balanced M&A market in this sector,” said Cianni. Towers Watson Quarterly Deal Performance Monitor Methodology
- All analysis conducted from the perspective of the acquirer
- Share price performance within quarterly study measured as percentage change in share price from six months prior to the announcement date to the end of the quarter
- All deals where the acquirer owned less than 50% of the shares of the target after the acquisition were removed, hence no minority purchases have been considered; all deals where the acquirer held more than 50% of target shares prior to the acquisition have been removed, hence no remaining purchases have been considered
- Deal data sourced from Thomson One Banker