Over the past year, M&A dealmakers have confronted their most prolonged challenges since the 2008–2009 financial crisis. Rising interest rates, geopolitical tensions, and recession fears contributed to a sustained downturn in deal activity that bottomed out in the first quarter of 2023.
Since that low point, however, more dealmakers have returned to the negotiation table and M&A activity appears to be stabilizing. This bodes well for a pickup in dealmaking in the coming months, despite macroeconomic, geopolitical and regulatory headwinds, according to the 20th edition of BCG’s Global M&A Report.
“We’re relatively optimistic about the outlook for 2024, as deal activity shows promising signs of recovery,” said Jens Kengelbach, BCG’s global head of M&A and a coauthor of the report. “That said, challenges for dealmakers remain—in particular, a higher cost of capital, which will push companies to consider large or transformational deals with an even higher level of scrutiny. This could mean pursuing acquisitions, divestitures, and sometimes a combination of the two in order to bolster growth and reshape businesses.”
M&A Market Stumbled in 2023
After the M&A frenzy in 2021 and early 2022, dealmaking was subdued during the latter half of last year and the first eight months of 2023. Through the end of August 2023, companies had announced approximately 21,500 deals year-to-date, with a total value of $1.18 trillion. Deal volume fell by 14% compared with the same period in 2022, and deal value plummeted by a staggering 41%.
The persistent slowdown in M&A activity since the first half of 2022 was evident across regions. Markets such as India, Taiwan, Italy, and Romania showed slightly more resilience, while the US, Canada, France, and Germany took a harder hit. The energy, power, and resource industries were the most active sectors globally in 2022.
Bold corporate dealmakers, particularly those in strong financial positions, capitalized on the uncertain…
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