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Global and Italian M&A Trends
Over FY19 and 9M20, global M&A activity has been challenged by the geopolitical and economic trends impacting the world for several years now: COVID-19 spread against a backdrop of economic fragility and uncertainty following Brexit, the decline in US-China trade relations, growing concerns around the environmental and social impacts of consumption, rising nationalism and digitalisation.
Italy was the first European country where the pandemic diffusion rapidly grew, and the first country outside of Asia to implement social distancing and lockdown measures.
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Global and Italian 9M'20 M&A Trends
From Italian M&A Panel at Italian M&A and Private Equity Forum, Mergermarket
Up until February 2020, high valuation multiples led to more selective deal-making and an increased focus on value creation strategies. We expect this to continue also in the current scenario, with large corporates looking at the divestiture of non-strategic assets to recover liquidity, as well as to opportunistic acquisitions, and Private Equities focusing on anti-cyclical investments in technology (including e-commerce and fintech), healthcare & pharma, education industries.
Businesses will look to crisis-proof themselves using M&A to achieve operational and financial resilience.
Deals Volumes and Values by Industry | Global
Global deal volumes declined by 15% in volumes and 58% in terms of value in 9M20 compared to 9M19.
Consumer Market is the industry most negatively affected by the pandemic (-24% 9M’20 vs 9M’19 in terms of volumes at global level). Only TMT showed an increase in the number of deals (+1% 9M’20 vs 9M’19), with a 59% drop in value.
Deals Volumes and Values by Industry | Italy
Italian deal volumes suffered a 27% decline in volumes, compared to -15% globally, since the market is smaller and more volatile. When it comes to deal value (available only for the largest tickets, i.e. 25-30% of the total deals), Italy suffered only a 3.5% decline, as statistics have been impacted by some large deals closed during the period, such as Permira’s acquisition of Golden Goose, Intesa San Paolo/UBI Banca merger and the acquisition of Infrastrutture Wireless Italiane SpA from a group of investors led by Ardian (Bain / Engineering deal value not included since non public).
M&A Global Trends Q1’18 – Q3’20
Global deal volumes bottomed in Q2/Q3’20 compared to last year (-24% in aggregate on these 2 quarters), with an average total deal value of c. $200bn per quarter compared to average $700bn in Q2/Q3’18 and ’19.
M&A Italy Trends Q1’18 – Q3’20
Italian deal volumes show a similar trends in terms of volumes (-40% in Q2/Q3’20 vs prior year), with a trough in deal value, driven by absence of large tickets in Q3’20 (Borsa Italiana,Telepass, Italian Football league deals announced in Oct20).
Corporate vs Private Equity | Global
The percentage of transactions completed by Corporates declined from ca. 70% in FY19 to 60% in Q3’20, while Private Equities proved to be more resilient increasing from 33% to 40%, as a result of the dry powder accumulated over the last 3 years.
In terms of value, the amount of deal value per quarter decreased from ca. $600bn in Jan19-Mar20 to ca. $200bn over the last 6 months, with Corporates declining from 70% in Jan19-Mar20 to ca. 43% in 3Q’20.
Corporate vs Private Equity | Global Deal Volume
|
Q1’ 19 |
Q2’ 19 |
Q3’ 19 |
Q4’ 19 |
Q1’ 20 |
Q2’ 20 |
Q3’ 20 |
Total Deal Volume |
8.432 |
9.618 |
9.351 |
9.556 |
8.804 |
6.993 |
7.487 |
%change1 |
-27% |
0% |
+1% |
-1% |
+4% |
-27% |
-20% |
Corporate vs Private Equity | Global Deal Value
|
Q1’ 19 |
Q2’ 19 |
Q3’ 19 |
Q4’ 19 |
Q1’ 20 |
Q2’ 20 |
Q3’ 20 |
Total Deal Value (US$bn) |
498 |
875 |
548 |
679 |
381 |
203 |
216 |
%change1 |
-59% |
+14% |
-28% |
+8% |
-23% |
-77% |
-60% |
(1) Change computed over the same Quarter of the previous year
Corporate vs Private Equity | Italy
The Italian trend in deal volumes mirrors the global one, with transactions completed by Corporates slightly declining from 64% in Q3’19 to 60% in Q3’20 and PE-led deals growing from 36% to 40%.
In terms of value, transactions led by Corporates remained more stable over the period at 60% of total deal value.
Corporate vs Private Equity | Italy Deal Volume
|
Q1’ 19 |
Q2’ 19 |
Q3’ 19 |
Q4’ 19 |
Q1’ 20 |
Q2’ 20 |
Q3’ 20 |
Total Deal Volume |
347 | 531 |
502 |
580 |
386 |
340 |
285 |
%change1 |
-23% |
+2% |
+15% |
+23% |
+11% |
-36% |
-43% |
Corporate vs Private Equity | Italy Deal Value
Q1’ 19 |
Q2’ 19 |
Q3’ 19 |
Q4’ 19 |
Q1’ 20 |
Q2’ 20 |
Q3’ 20 |
|
Total Deal Value (US$bn) |
9 |
13 |
7 |
20 |
13 |
11 |
3 |
%change1 |
-71% |
-27% |
-69% |
+1% |
+64% |
-12% |
-57% |
(1) Change computed over the same Quarter of the previous year
Source: Refinitiv and PwC Analyses
About the data
Please consider that analysis on deal value may result partial covering ca. 30% of deals presented in the statistics. The statistics include only closed deals, allocated to quarters based on the announcement date.
Valuation-gaps between seller’s consideration and buyer’s more conservative approaches will be covered with a greater retention of minority stakes by vendors, and increase in earn-outs / deferred remuneration at exits
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Emanuela Pettenò
Partner | Transaction Services Consumer and Market Deals Leader, PwC Italy
Tel: +39 02 66720236
Nicola Anzivino
Partner | Global Industrial Manufacturing & Automotive Deals Leader, PwC Italy
Tel: +39 02 80646334
Giovanni Tinuper
Partner | Transaction Services and Data Analytics Leader, PwC Italy
Tel: +39 02 66720205
