Global Q3 M&A sinks to 3-year low amid US-China trade war fears

Global mergers and acquisitions (M&A) plunged 16 percent year-on-year to $729 billion in the third quarter, according to Refinitiv data, the lowest quarterly volume since 2016, as growing economic uncertainty curbed the risk appetite of companies considering deals.

Concerns that the trade war between the United States and China has plunged global economic growth to its lowest levels in a decade weighed on dealmaking, even as debt financing for acquisitions remained cheap and equity markets stayed robust.

"M&A volumes have dissipated because there are concerns that risks may be rising in several spots, in markets and elsewhere," said Michael Carr, global co-head of M&A at Goldman Sachs Group Inc.

The United States, where consumer spending barely rose in the summer and business investment remained subdued amid the trade tensions, was particularly hit. US M&A sank 40 percent year-on-year to $246 billion in the third quarter, the lowest such quarterly level since 2014.

Asia, which has been hit by concerns over the future of Hong Kong as a financial hub following a wave of pro-democracy protests, fared only slightly better. M&A activity in the region dropped 20% year-to-year to $160 billion, the lowest level since 2017.

Dealmakers said a mismatch between buyer and seller valuation expectations often proved hard to bridge, with some deals failing to reach the finish line.

"Companies looking at deals have become more risk-averse, and this is likely to bring M&A volumes down for the year. But we expect M&A activity to be strong going into next year," said Robin Rankin, global co-head of mergers and acquisitions at Credit Suisse Group AG.

The only regional bright spot in the third quarter was Europe, where M&A activity reached $249 billion, up more than 45% over the same period last year.

"In Europe we have seen a real mix of different kind of deals which were spread across various sectors and geographies," said Eamon Brabazon, co-head of EMEA M&A at Bank of America Corp.

"This is a sign of a healthy market because we're not relying only on a particular strand.

There's no obvious reason to believe the M&A market will turn south in the foreseeable future," he added.