European M&A deal volume posted a sharp recovery in Q3 2020, significantly rebounding from the near-decade-low quarterly volume we experienced in Q2. The use of creative pricing structures such as earn-outs and deferred considerations greatly helped alleviate risk and bridge valuation disconnects. The IT sector had its best quarter in terms of its share of M&A deal volume in Q3 2020, while cross-border M&A deal volume fell quickly because of growing nationalist economic sentiment, government intervention, and travel challenges. Among other highlights:
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- Sponsor-backed deal volume recovered impressively in Q3 2020, as GPs were selectively aggressive in certain parts of the economy.
- M&A deal value in the UK & Ireland is on pace for its lowest annual showing since 2014. Uncertainty arising from the impending Brexit deadline and the coronavirus pandemic has dampened business confidence.
- France & Benelux M&A also cooled considerably since peaking in 2018. Emerging IT and manufacturing sectors in the region have driven deal value as dealmaking lagged in traditionally strong industries such as energy and tourism, which have struggled during the COVID-19 pandemic.