Editor's note: This article was first published in The American Lawyer's April issue.

After being buffeted by political headwinds throughout the year, it comes as no real surprise to lawyers working in Europe that the continent's M&A deal activity dropped considerably in 2019 amid shaky client confidence. But data from intelligence provider Mergermarket, released at the end of December, has revealed the full extent of the market's struggles in the region. The continent accounted for just 23.1% of global M&A activity in 2019, its weakest contribution since before Mergermarket records began.

In large part, lawyers say, the poor performance was due to a number of geopolitical uncertainties, including the U.S.-China trade war and the implications of the U.K.'s exit from the European Union. The upshot of this uncertainty was that the level of inbound investment into Europe from overseas plummeted, despite an increase in the level of outbound investment as investors looked further afield for suitable assets.

Unsurprisingly, private equity remained the key driver of M&A activity in the region last year, with swathes of unspent capital still available to be deployed. Public-to-private transactions, take-privates and carve-outs have grown more popular across Europe as businesses seek to maximize the value of their assets.

Some also note an increasing amount of activist investors looking to make their mark in Europe. While the trend is still a way off from hitting the mainstream market, lawyers say that some U.S. businesses have started to generate an appetite for it on this side of the Atlantic.

Deals in the pharmaceutical and technology, media and telecommunications sectors drove M&A activity on the continent, with key deals including the merger of Irish pharma company Allergan with U.S. rival AbbVie reportedly valued at $63 billion.

The impression from lawyers in Europe is that this has been a temporary hiatus for the M&A market and that—in the U.K. at least—2020 has gotten off to a promising start as political tensions soften and clients begin to adapt to the new geopolitical climate and simply get on with things.

"In theory, you'd think that there is less political uncertainty in the U.K. and that may drive greater confidence, which drives greater investment, in particular in the first part of this year before we get back into a lot of political rhetoric around our trade arrangements," Slaughter and May M&A partner Richard Smith says. "If you look around at reports about the confidence levels of CEOs and CFOs, there is a feeling that there is a high level of confidence in the U.K."

Smith says that, while he didn't think 2019 was a bad year for the European market at the time, the drop in activity feels stronger in hindsight, largely due to the fact that 2018 was an uncharacteristically busy year, with 11 mega-deals—transactions valued at over $10 billion—closing in Europe throughout the year.

In contrast, 2019 saw the announcement of just five mega-deals, the lowest total since 2009, according to Mergermarket. Lawyers speak not only of their struggles to get deals off the ground, but also to keep them from falling over prior to completion.

One reason for the unpredictability within the U.K. is the growing influence of regulatory bodies like the Competition and Markets Authority, which has recently taken a more interventionist approach to big-ticket transactions including the proposed multi-billion pound tie-up of food delivery services Just Eat and Takeaway.com.

And with the U.K.'s final exit from the EU looming, both lawyers and regulators alike are trying to work out where exactly they fit within the new European M&A environment.

Lawyers also cite the ongoing U.S.-China trade war as a reason for a drop in the geographical spread of investment.

"The other thing that might have an impact is what might happen in the U.S.," Smith says of the upcoming presidential election. "Should there be a candidate for the Democrats that looks like they could make a significant run against [President Donald] Trump … we may find that the U.S. becomes a less attractive place for investment during the year, and if money needs to be spent across the globe, we might find Europe to be a beneficiary of that."