The nine quarters up to the end of Q1 2020 – the onset of the Covid pandemic – averaged 196 US acquisitions in Europe per quarter. The level of quarterly dealmaking activity naturally dropped sharply as Covid hit, but then consistently and dramatically increased on a quarterly basis to a peak of 493 US acquisitions of European companies in Q1 2022. However, the level of US acquisitions in Europe has since fallen back towards pre-pandemic average levels (233 in Q3 2023).
For European acquisitions of US businesses, the nine quarters up to the end of Q1 2020 averaged 135 deals per quarter, again dropping sharply at the onset of the Covid pandemic before increasing to a peak of 268 deals in Q1 2022. The level of European M&A activity in the US has now actually fallen below pre-pandemic levels of dealmaking (110 deals in Q3 2023).
The significant – and clearly unsustainable – growth in transatlantic deal volumes through 2021 and into 2022 has normalised during the extraordinary economic environment we have encountered in 2023. The apparent loss of confidence of European buyers in transatlantic dealmaking is of some concern – with the number of European acquisitions in the US in Q3 almost half the level of the corresponding period in 2022. We will monitor Q4 data for signs of an improvement in European buyer appetite for transatlantic M&A.
In terms of regional activity, the UK was the most popular country for US buyers during the quarter (37% of total deal volume), followed by Germany (17%), France (10%), the Netherlands and Italy (5% each).
Conversely, the UK was the most active European country in the quarter for acquisitions in the US (43% of total deal volume), followed by France (12%), Switzerland (10%), Germany and Italy (7% each).
European buyers in the US are predominantly making add-on acquisitions for existing operations (78% of total deal volume in the quarter). While US buyers in Europe are also making add-on acquisitions (58% of US deal flow in Europe in the quarter), they are bolder in terms of new platform acquisitions (42% versus 22%).
Interest in the acquisition of Aerospace & Defense assets remains robust, with near-record deal volumes in recent years, given the financial resilience and projected near-term growth of the sector. Drivers of strong transatlantic M&A activity in the sector include:
positions, becoming “local” on the other side of the Atlantic
Select Stephens recent transatlantic Aerospace & Defense transactions