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ANALYSIS: Q1 M&A Deal Terminations Continue Positive Trend

April 30, 2021, 9:00 AM

For those scanning the horizon for clouds in the currently bright mergers and acquisitions market, you won’t find any by looking at deal terminations data: they continue to show positive signs. The number of global M&A deals that were terminated during the first quarter (that is, after the parties entered into a definitive agreement) is around the same level as the number of terminations that occurred in the first quarters of 2020 and 2019. Going back further, the first quarter’s total is noticeably lower than terminations in the first quarters of years 2015 through 2018. And the number of deals terminated in March was the lowest of any month of March since 2014.

A total of 70 deals valued at $1 million or greater for the control of the company or assets to be acquired were terminated last quarter. Compared to first quarters of recent years—2020 (60 terminated deals), 2019 (79 terminated deals), 2018 (97 terminated deals), 2017 (110 terminated deals), 2016 (88 terminated deals), 2015 (98 terminated deals)—this total appears quite normal, if not low.

As a percentage of all completed and terminated deals combined, Q1’s terminations represent 3.5%, which is on par with the first quarters of 2020 (3.0%) and 2019 (3.7%).

Deals involving China targets experienced the highest aggregate number of terminations last quarter (19 terminated deals), followed by Japan targets (7 terminated deals), and the U.S. targets (7 terminated deals). It’s worth noting that our data indicate that China typically leads in terminations: When we expand the time period and look back at all deals terminated since Jan. 1, 2010, terminations of deals involving China targets (1,141 terminated deals) dwarf all other target countries. By way of comparison, U.S. targets come in second place but had only a little over half that number of terminations (640 terminated deals) despite U.S. targets having been involved in about five times the total number of completed deals involving China targets during the period.

By the typical measures, e.g., pending and completed deal volume, the M&A market is making a strong start in 2021, and terminations are not indicating anything to the contrary.

With assistance from Nageen Qasim and Mat Ziegler, Bloomberg L.P.

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