Global Merger-and-Acquisition Activity Drops 36% in Second Half of 2022

There was a record drop in global merger-and-acquisition (M&A) activity over the last six months.

The value of global M&A deal-making fell from $2.2 trillion in the first half of 2022 to $1.4 trillion in the second half, the Financial Times (FT) reported Thursday (Dec. 29), citing figures from data provider Refinitiv.

That’s the greatest change seen — up or down — since the firm began collecting the data in 1980, according to the report.

The volume of M&A activity was down, too. The number of deals completed around the world in 2022 was 36% lower than it was in 2021 — the largest drop recorded since 2001 — although it remained higher than it was in 2016 and 2017, the report said.

The report attributed the steep drop in M&A activity to global markets’ lower confidence and higher cost of financing, adding that activity was at a record high in 2021 due to stimulus measures and interest rate cuts implemented in response to the pandemic.

Increased regulatory scrutiny, slower deployments by private equity groups and lesser ability of banks to finance new deals have also contributed to the drop, according to the report.

In one recent example of the trend, special purpose acquisition company (SPAC) Crypto 1 Acquisition Corp. said Dec. 9 that it would dissolve and liquidate.

As PYMNTS reported at the time, the move came one year after the company closed its $230 million initial public offering (IPO).

“The company anticipates that the company cannot consummate an initial business combination within the time period required by its amended and restated memorandum and articles of association,” Crypto 1 Acquisition said.

On the other hand, Latin America may see more M&A activity in 2023, with bankers expecting it to grow by as much as 20% in that year, Reuters reported Tuesday (Dec. 27).

The report attributed this anticipated growth to investors looking at the region after moving away from activity in Russia and China — the former due to the war in Ukraine and the latter because of concerns about COVID, tensions with the United States and a lack of transparency among Chinese firms.