Companies that acquired other companies underperformed the broad market in 2019 for a third consecutive year, according to an analysis by Willis Towers Watson and the University of London’s Cass Business School.

Acquirers’ share-price performance trailed that of the MSCI World Index by 5.0 percentage points, following deficits of 3.0 and 1.3 percentage points in 2018 and 2017, respectively.

At the same time, global dealmaking dragged to its slowest pace in six years, with 774 transactions worth more than $100 million completed last year, compared with 904 in 2018. Almost half (42%) of the deals did not add shareholder value.

In the United States, there were just 173 large deals (valued above $1 billion) in 2019, the lowest in five years.

“Last year may have ended with a flurry of deals, but the global picture for mergers and acquisitions was patchy at best,” said Duncan Smithson, senior director of M&A for Willis Towers Watson. “As regulatory, political, trade, and economic uncertainties persist, the market will likely continue at a slow pace in 2020, with companies in wait-and-see mode.”

It should be particularly so in North America, where many transactions are on hold due to trade tensions and a slowing U.S. economy and because presidential election years tend to bring market volatility, Smithson added.

In China just 72 deals closed in 2019, continuing a freefall from a record 243 in 2015. The slowdown, partly attributable to a sharp decline in outbound Chinese acquisitions, is consistent with a wider trend of fewer M&A deals across the Asia-Pacific region and is expected to continue in 2020.

However, marginally improved deal performance by Asia-Pacific dealmakers in 2019 suggests some improved stability after a turbulent few years, according to Willis Towers Watson.

European dealmakers topped the global M&A rankings in 2019 for a second consecutive year, outperforming the regional MSCI index by 1.9 percentage points, “and we expect this positive trend to continue,” the consulting firm said.

For the study, share-price performance was measured as a percentage change in price from six months prior to a deal’s announcement date to the end of the quarter in which the deal closed. Only completed deals with a value of at least $100 million were included in the research.

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