As would be expected given the current environment, M&A activity globally and in the U.S. declined across almost all measures in March. Globally, the number of deals decreased by 3.2%, to 2,527, and total deal value[1] decreased by 17.5%, to $210.25 billion. U.S. M&A activity also declined, with the number of deals decreasing by 17.2%, to 641, and total deal value decreasing by 48.4%, to $52.05 billion. Average deal value declined overall—falling by 37.7% in the U.S., to $82.1 million, and by 14.8% globally, to $83.2 million. Figure 1. The decline in dealmaking activity observed in February continues, and is likely to accelerate into April given the impacts of the COVID-19 outbreak on the global economy and financial markets. For our client memoranda on navigating this crisis, visit our Coronavirus (COVID-19) Resource Center.

Strategic vs. Sponsor Activity

Strategic and sponsor activity both declined in March. The number of strategic deals decreased by 17.1% to 514 in the U.S. and by 0.1% to 2,244 globally. Meanwhile, strategic deal volume as measured by dollar value decreased significantly by 58.7% to $26.24 billion in the U.S. and by 1.4% to $160.69 billion globally. The number of sponsor-related deals also decreased by 17.5% to 127 in the U.S. and by 22.3% to 283 globally. Sponsor-related volume by dollar value also decreased considerably by 30.9% to $25.82 billion in the U.S. and by 46.1% to $49.57 billion globally. Figure 1 and Annex Figures 1A—4A.

Crossborder Activity

Global crossborder volume was more mixed in March 2020. The number of crossborder deals fell by 9.2% to 540, while increasing in dollar value by 75.3% to $86.22 billion. The number of U.S. inbound crossborder deals decreased in March by 2.2% to 89 and U.S. inbound activity as measured by dollar value decreased by 23.7% to $4.59 billion. The number of U.S. outbound crossborder deals increased by 2.9% to 107 and U.S. outbound activity as measured by dollar value increased significantly by 1,072.9% to $49.86 billion, driven largely by the announced acquisitions of Willis Towers Watson plc by Aon plc for $36.14 billion^[2] and Qiagen NV by Thermo Fisher Scientific Inc. for $11.17 billion. Figure 1 and Annex Figures 5A—7A.

China was the leading country for U.S. inbound activity in March by total dollar value ($0.82 billion) and the U.K. was the leading country for U.S. inbound activity by total dollar value over the last 12-month period ($42.80 billion). Canada retained its lead for U.S. inbound activity by number of deals in March (21) and over the last 12-month period (311).

The U.K. was the leading country of destination for U.S. outbound activity in March both by total dollar value ($36.60 billion) and by total dollar value over the last 12-month period ($57.31 billion). The U.K. was also the leading country of destination for U.S. outbound activity by number of deals in March (25), and retained its lead as the leading country of destination for U.S. outbound activity by number of deals over the last 12 months (253). Figure 3.

U.S. Deals by Industry

Computers and Electronics was the most active target industry in March and over the last 12 months by number of deals (221 and 3,460, respectively) as well as the most active target industry by dollar value in March and over the last 12 months ($13.00 billion and $323.35 billion, respectively). Figure 2.

U.S. Public Mergers

As for U.S. public merger deal terms in March 2020, average reverse break fees were below their 12-month levels (at 3.6% compared to 5.5%), while March average target break fees were above their 12-month average (at 3.9% compared to 3.6%). No deals contained go-shop provisions in March 2020, while 12.6% of deals contained a go-shop provision over the last 12 months. Figures 6, 7 and 8. All cash transactions comprised 50.0% of U.S. public mergers, below the 55.0% 12-month average, and March 2020 is the second month in a row where there were no mixed or choice-election transactions. Figure 9. Hostile or unsolicited transactions comprised 33.3% of U.S. public mergers in March 2020, significantly above the 12-month average of 13.3% of deals. Figure 12.

ENDNOTES

[1]    Each metric in this publication that references deal volume by dollar value is calculated from the subset of the total number of deals that includes a disclosed deal value.

[2]   U.S. crossborder transactions are those transactions where the acquirer and the target have different nationalities and either the acquirer (“Outbound”) or the target (“Inbound”) has a U.S. nationality. Nationality is based on where a company has either its headquarters or a majority of its operations.