Global M&A Activity in 2022
Global M&A activity in 2022 varied by region, with more deals in EMEA in 2022 than in the Americas and APAC regions – despite higher energy costs and regional instability – highlighting a shift by investors to find opportunities and growth in other markets.
In EMEA, deal volumes and values declined by 12% and 37%, respectively, between 2021 and 2022. With approximately 20,000 deals in 2022, activity in the region remained 17% higher than pre-pandemic 2019 levels.
In the Americas, (approximately 18,000 deals) deal volumes and values declined by 17% and 40%, respectively, between 2021 and 2022. Deal values were particularly hard-hit and the number of US megadeals – transactions with a value exceeding US$5bn – almost halved from 81 to 42 between 2021 and 2022, respectively. The decline in the second half of the year was more acute, with just 16 megadeals compared to 26 in the first half of 2022.
In the Asia-Pacific (approximately 16,000 deals), volumes and values declined by 23% and 33%, respectively, between 2021 and 2022. The greatest declines were observed in China – impacted by COVID-19 challenges and weakening demand for exports – where deal volumes and values decreased by 46% and 35%, respectively. Companies seeking access to Asian markets are increasingly looking beyond China – to India, Japan and other countries within Southeast Asia – for investment opportunities. India has emerged as an increasingly attractive destination for investment, overtaking Japan and South Korea in deal values to rank second in the region behind China.
Global M&A Outlook for 2023
Macroeconomic volatility and geopolitical conflict are not having a uniform impact across industries. The following industry dynamics will create opportunities for M&A in 2023:
- Technology, Media and Telecommunications (TMT): Digitalisation for many businesses remains a key focus. Software deals will continue to dominate the sector – as much as they did in 2022 – having accounted for two-thirds (71%) of tech deal activity and three-quarters (74%) of deal values. Other areas which will likely be hot spots of M&A activity in 2023 include telecoms, the metaverse and video games.
- Industrial Manufacturing and Automotive (IM&A): Portfolio optimisation will drive divestitures and acquisitions, particularly those focused on sustainability and accelerating digital transformation.
- Financial Services (FS): Disruption from platforms and FinTech is driving rapid technological changes across FS and will boost M&A as players seek to acquire digital capabilities.
- Energy, Utilities and Resources (EU&R): Energy transition will remain a priority for investors and management teams, directing large volumes of capital to M&A and other capital project development.
- Consumer markets: While challenges remain on the consumer front in 2023, portfolio reviews and a focus on transformational transactions will create M&A opportunities
- Health industries: The need to innovate and transform businesses to achieve growth goals will drive M&A activity in 2023. Biotech, CRO/CDMO, MedTech, consumer-facing healthcare and digital health solutions are expected to attract strong investor interest.
Macroeconomic and geopolitical volatility will also impact market players differently, creating advantages for some, and challenges for others:
- Corporates: Strong balance sheets will present an opportunity for corporates given tight financing conditions.
- Private Equity: PE will be looking at new deals and will be focused on creating value in their portfolio companies, which in turn will involve optimisation, build-ups, and divestitures.
- Special Purposes Acquisition Companies (SPACs): While SPACs raised approximately $230bn in capital through IPOs since 2020, increasingly more are struggling to close deals, and many are likely to run out of time.
- Credit Funds and Private Markets: Their lending will gain M&A share from banks and become key to providing much-needed liquidity, particularly in mid-market deals.
- Venture Capital: VC may retreat from some riskier investments, but climate tech investing remains a potential bright spot with more than one-quarter of all VC funding now going to climate technologies, especially those focused on cutting emissions.
