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The total value of global mergers and acquisitions (M&A) deals dropped significantly in 2022 compared to the previous year, due to challenging economic conditions, according to the latest M&A report from GlobalData, a leading data and analytics company.

2022 saw a steep decline of 29% in total deal value to $2.8 trillion from the $3.9 trillion reported in 2021.

GlobalData’s latest report ‘Mergers and Acquisitions Deals in 2022 by Top Themes and Industries,’ reveals that total deals count also fell by 6%, from 39,170 in 2021 to 36,704 in 2022. The market slowdown in 2022 also impacted the number of mega deals worth over $1 billion each. A total of 497 mega deals were completed, compared to the 835 mega deals reported in 2021.

“A combination of factors including higher debt costs, declining equity markets, and economic uncertainty are driving the slowdown in the M&A market,” said Shri Charan Padala, Principal Analyst, Thematic Intelligence at GlobalData. He said the outlook remains uncertain and deal activity is likely to remain subdued at least in the first half of 2023.”

A notable market trend was the continued dominance of North America in M&A deal activity. In 2022, North America accounted for 40.7% of total global M&A deal value, indicating that the region remains a highly active and influential player in the global M&A market.

Padala adds: “However, all regions, except for the Middle East and Africa and Asia Ex-China, recorded a decline in deal value in 2022 compared to the previous year. This suggests that companies and investors in these regions may have taken a more cautious approach to M&A activity in 2022, due to economic uncertainty and other factors.”
 
Padala concludes: “In spite of the dip in global M&A activity in 2022, it is likely that the market will rebound in the coming years as acquisitions remain a key element of corporate strategy. Private equity firms are well-positioned to take advantage of lower valuations and look for turnaround deals during economic slowdowns. Companies that have maintained cash reserves can also capitalize on the market opportunity of lower valuations to pursue strategic growth. Despite mixed sentiments among executives, the market has shown resilience in the face of economic challenges, indicating a possible recovery over the course of 2023.”