Deal success: 2009 better than 2008
A study the Cass Business School conducted for Towers Perrin and reported widely (see, for example, Reuters’ report on 10 September 2009, ‘Deal Talk — Rallying stock markets help accelerate M&A plans’) showed that firms that do M&A deals are more likely to outperform their industry peers (and the market overall) than firms that have held back on doing acquisitions. This is consistent with an earlier study (released in June) that Towers Perrin sponsored and which focussed on the short-term market reaction to companies who were brave enough to do deals subsequent to the infamous Lehman bankruptcy weekend in September 2008. Both studies looked at all deals over $100 million done by public companies.
As reported in the above 10 September 2009 Reuters article: ‘Marco Boschetti, global head of M&A and restructuring at business consultancy firm Towers Perrin, said deals that closed in the second quarter of the year outperformed the market by 8.5 percent, compared to outperformance of 2 percent in the second quarter of 2008. “What this is saying is that there is a lot of value in deals at the moment and if you can afford to close a transaction you should go for it,” he said.’
This continues to confirm that the inflexion point in M&A activity may have been reached already, which I will write about shortly. Certainly if the word gets out that the market does reward firms that announce strategically defensible deals, even more deals should emerge from the planning stage to announcement and execution.