Bain: Global M&A market returns to pre-pandemic levels

08 February 2023 3 min. read
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In line with economic trends, the global mergers & acquisitions market declined sharply in 2022, according to research by global strategy consultancy Bain & Company.

The year 2022 was a tale of two halves for the world of buyers, sellers, dealmakers and investment bankers. After a blockbuster 2021 for mergers & acquisitions (when total deal value hit a staggering US$5.9 trillion), dealmaking activity cooled down significantly in the second half of the year, with many large deals going on pause while smaller deals slowed.

Overall, global M&A activity stalled at US$3.8 trillion in 2022 (hovering around pre-pandemic levels), with deal volume also seeing a double-digit drop. The decline was visible in all regions, with one exception: the Middle East, where a strong buy appetite from sovereign wealth funds drove deal activity to new heights.

The year 2022 was a tale of two halves

The global decline was – not surprisingly – induced by the changed economic tide in 2022. “Inflation, interest rates, capital availability, industrial policy, national security, geopolitical tension, supply chain uncertainty – in 2022, dealmakers faced new levels of volatility and risks everywhere they looked,” said the authors in the report.

Another key factor for lower dealmaking was rising interest rates, although this predominantly impacted financial investors. Private equity investors are mostly reliant on debt for financing deals, and thus were directly exposed to capital constraints and costs, which particularly impacted large deals. Lenders increased scrutiny on new offers as banks absorbed loan commitments that they could no longer syndicate.

Further reading: Global private equity industry preparing for choppy waters ahead.

By comparison, corporates tend to be shielded from the near-term effects of interbank interest rate changes, as they typically have more options to finance mergers & acquisitions than leverage alone – namely, stock and cash.

As a result of the lower overall appetite for transactions, deal multiples fell from record highs in 2021 (15.4x EBITDA) to an average multiple of 11.9x EBITDA.

Global M&A deal value fell by 36% in 2022


Looking ahead into 2023, Bain & Company’s experts said that the market is likely to see increased dealmaking, as corporates and financial investors look to seize opportunities in an uncertain market.

“Based on what we know from past economic down cycles, we anticipate ample opportunity in 2023 for well-prepared acquirers to make bold, strategic moves,” said Les Baird, Leader of Bain’s Global M&A practice. Previous research from Bain & Company found that companies who during a downturn were active in M&A managed to financially outperform those that sat on the sideline in the years that followed.

For those that indeed turn to deal activity, the researchers emphasize the need to operate with more caution. “In the face of uncertainty, proactive, deeper due diligence is more important – not just to deliver a competitive advantage in the speed and quality of deals done, but also as a means of mitigating unforeseen risks.”