The global M&A market has fallen to a ten-year low

At the end of 2023, the volume of the global M&A market decreased to $3 trillion – for the first time in ten years. This is facilitated by ongoing geopolitical tensions, economic uncertainty, rising interest rates and other negative factors. Experts expect the M&A market to rise in the future, but this rise may only begin in the second half of 2024 or even 2025.

According to estimates by the London Stock Exchange (LSE) and Dealogic, the size of the global mergers and acquisitions (M&A) market in 2023 was lower, or approximately at $3 trillion. This is the lowest figure since 2013, when this market was $2.8 trillion. According to LSE data cited Financial Times, the volume of M&A decreased by 17% over the year, not even reaching $3 trillion, despite the fact that last year was quite unsuccessful for this market. It is also the first time since the 2008-09 global financial crisis that the market has declined by more than 10% for two years in a row, the LSE said. Previously reported about similar estimates by Dealogic, according to which the volume of M&A fell by 18%, to $3 trillion.

The mergers and acquisitions market showed strong growth during the COVID-19 pandemic—at the end of 2021, it grew by 64%, reaching a record $5.7 trillion. But in the past year, many companies have frozen merger plans due to geopolitical tensions and economic difficulties.

As experts note, this year there has been no improvement – the geopolitical situation, economic uncertainty, market volatility and rising interest rates continue to negatively affect the number and volume of transactions.

In addition, regulators in different countries began to more strictly check many transactions – so, because of this fell apart $20 billion deal between Adobe and Figma and I almost lost it the $69 billion purchase of game developer Activision Blizzard by Microsoft. This could have a negative impact on the number of particularly large mergers: according to Dealogic, the number of deals worth more than $5 billion fell from 93 to 79, and deals worth $10 billion or more from 37 to 33 .

However, 2023 saw several major mergers in the oil and gas sector, which benefited from rising oil and gas prices in 2022. So, in October ExxonMobil acquired another American company – Pioneer for $59.5 billion, and Chevron bought shale oil producer Hess for $53 billion. Also among the major transactions of the current year are purchase pharmaceutical corporation Pfizer biotechnology company Seagen for $43 billion and acquisition network equipment manufacturer Cisco Systems to cybersecurity company Splunk for $28 billion.

“It is clear that 2023 has been very weak and more subdued than we expected in terms of deal volumes,” said Simone Maellare, co-director of UBS’s Alternative Capital Group.

“The regulatory environment has been challenging throughout the year. And as soon as the situation began to improve, it happened (an escalation of the conflict.— “Kommersant”) in the Middle East,” Mark Sorrell, co-director of global M&A at Goldman Sachs, described the year.

According to LSE estimates, the volume of mergers and acquisitions fell the most in Europe – by 28%. In the Asia-Pacific region the decline was 25%, in the US – only 6%. According to Dealogic, the volume of transactions involving private investors decreased especially sharply – by 38%, to $433.6 billion.

According to the Financial Times, many experts predict that the M&A market may begin to recover next year, but most likely not earlier than the second half of the year. “We were surprised how difficult it was to do deals in 2023. I think there will be a rebound in the M&A market, but it is unclear whether this will happen in 2024, or whether next year will just be a preparation for (recovery.— “Kommersant”) 2025,” says Paul Tobman, founder of the investment bank PJT Partners.

Yana Rozhdestvenskaya