The first few months of the year often bring icy downpours in Europe, but few were expecting the cold shower that hit M&A activity here in the first quarter of 2019, when the rate of mergers between European companies dived 52% compared to the last quarter of 2018. How to explain such a precipitous decline?
First, there was the problem of ever more fierce competition from investment funds buying up companies like there was no tomorrow. But that’s only part of the picture; the dramatic decline can also be put down to the deteriorating global economic landscape, with the Sino-American trade war ratchetting up, a wave of protectionism sweeping the Old Continent, competition authorities and the EU throwing their weight around, not to mention national governments becoming less laissez faire when it comes to the age old practice of companies taking over other companies.
So, these must be testing times for M&A, right? Well if that’s the case, no one has told the dealmakers on this list, many of whom, such as Total’s Patrick Pouanné, (No. 1 on our list) continue to get the checkbook out.
And M&A often has the effect of raising standards. According to a study by the UK’s Cass Business School, the environmental standards of the acquiring company are on average two times better than those of the target company. Once a takeover is complete, the purchased company gains access to more environmentally sound practices.
Having a positive environmental impact has entered into the thinking of dealmakers everywhere, which is precisely the ambition of Sonepar boss Marie-Christine Coisne-Roquette (No. 7 on our list), who has made multiple purchases recently, including, earlier this year, the acquisition of Italian electrical products wholesaler Sacchi.
Increasingly, CEOs are making greenbacks and backing green policies.
Outside of objective criteria (turnover, market value and growth rate) Leaders League used the following five criteria when compiling our Top Ten Dealmaking Executives list
Longevity: must have occupied current position for at least three years
Growth: their company’s annual turnover must exceed €250 million and growth must be above the average for their sector
Profitability: for listed companies, annual profits must exceed the previous year’s results
Innovation: demonstrable impact on company’s sector of activity and potential future growth
Social responsibility: have an ESG program in operation