M&A deal volumes in 2019 turned out to be quite resilient, despite a time of significant economic and geopolitical uncertainty. However, instead of scale economics (businesses looking to capture the benefits of cost and customer overlap) driving deal activity, scope deals (those predicated on getting into faster-growing lines of business or acquiring new capabilities) dominated.
• Is this rise in scope M&A a response to business model disruption and low growth?
• Do the unprecedented levels of regulatory scrutiny simply mean that scale deals are becoming harder to clear?
• Does scope deal diligence, which requires a deeper assessment of asset quality and potential for joint value-creation, improve the odds of success?
• Are a growing number of small and medium-sized tech-enabled businesses simply becoming more attractive to dealmakers in the current climate than costly and heavily transformative mega-deals?