Global merger and acquisition activity fell sharply in the first quarter of 2020, with dollar volume dropping 28% to $698 billion and the number of deals off 14% to 9,616, according to preliminary data from Refinitiv.
The big picture: The dollar drop was largely driven by the disappearance of megadeals valued at over $10 billion, which fell from $412 billion for the Jan. 1–March 28 period in 2019, to $179 billion that same period this year.
- U.S. deal value also took a big bite, off 51%, which was enough to offset gains in Europe (+120%) and Japan (+66%).
- The biggest falls by sector were for energy, health care, and materials. The only significant gainer was industrials, while consumer products, consumer staples, and retail were largely flat.
- Private equity deal dollars actually rose slightly, bringing its percentage of the M&A market up from 10.7% in 2019 to 15.6% in 2020.
The deal number drop is a bit more complicated.
- Yes, a 14% fall is significant. And unlike with the deal dollars, private equity played a major role with a 25% year-over-year decline.
- But it's not much higher than the 13.1% decline between the 2018 and 2019 time periods.
The bottom line: Last year the deal dollar and number drops were nearly on par with one another, which suggests that there has been a lot of downward renegotiation over deals that were almost at the finish line.
