Following months of subdued transaction activity, the European M&A market witnessed widespread recovery in Q3 2020, although the activity in four out of six industries was still below pre-COVID levels in Q3 and Q4 of 2019. The total number of transactions (M&A transactions, which were announced or announced & closed in the same quarter and have published at least one multiple) across the six industries increased to 182 during Q3 2020. As compared to 124 deals in Q2 2020, this is an increase of 47%. The activity improved also as compared to 173 transactions recorded in Q1 2020, however, it is still below 234 transactions in Q4 2019.
While the number of transactions increased for all industries except for Energy & Utilities in Q3, the highest increase was observed in the industries chemicals, construction and materials, which also leads the chart with total 60 deals, followed by healthcare as well as media, technology and telecommunication showing growth rates of 90% and 50%.
According to the recent Mergermarket report on deal drivers, the large uptick in the M&A activity was mainly due to the pent-up demand for M&A ever since the lockdowns started. As soon as lockdowns were lifted across Europe, the M&A activity regained buoyancy. However, while a second wave of pandemic is coming with an accelerating speed and further business restricting measures and lockdowns are not excluded, the M&A market reaction is very uncertain to predict.
The top countries in terms of target company location were UK (17%), followed by France, Germany, Italy (8-10% each).