Global deal making fell last year to its lowest levels since 2013.
In 2019 there were 774 transactions valued at over $100m (£76m) completed worldwide, compared with 904 deals in 2018, and the lowest annual volume recorded since 2013 (720).
Major deals last year included Marsh & McLennan’s £4.6bn acquisition of insurance broker Jardine Lloyd Thompson, Abbvie’s mammoth $63bn takeover of Botox-maker Allergan and Nestle’s £8bn sale of its skincare arm to a consortium led by private equity firm EQT.
According to analysis from Willis Towers Watson and Cass Business School, M&A in 2019 on average failed to add value for shareholders.
Acquirers underperformed the global index by five percentage points over the past year for deals valued over $100m, based on share-price performance, and have now on average failed to add value from deals for three consecutive years.
Head of UK M&A for Willis Towers Watson Jana Mercereau said: “Last year may have ended with a flurry of deals, yet the global picture for mergers and acquisitions in 2019 was patchy at best.
“As regulatory, trade and economic uncertainties persist, the market is likely to continue at a slow pace in 2020, with companies in wait-and-see mode, particularly in North America where many transactions are on hold due to trade tensions, a slowing US economy and because presidential election years historically bring market volatility.”
Mercereau predicted that dealmaking would continue to struggle in 2020, driven by a slowdown in US M&A.
During 2019 the volume of deals valued over $1bn was 173, the lowest for five years.
Mercereau said market reluctance to take on large deals may signal companies stepping up preparations for a recession.
UK deal volume was at its lowest for a decade in 2019 with 31 deals over $100m, according to the data.
Mercereau said deal volume will continue to stay low “as long as the risk of a cliff-edge no-deal Brexit remains”.
Mercereau added: “Market conditions are becoming increasingly challenging, yet many investors with plenty of dry powder remain cautiously optimistic about the year ahead.”
And said: “Key drivers for pursuing acquisitions in 2020, meanwhile, are likely to remain unchanged from last year, as companies seek access to new markets or respond to tech disruption by acquiring the latest technology or highly skilled workers.”