Aug 15, 2022 - Economy

Merger activity may be down, but it’s still on a near-record pace

Note: M&A data excludes SPAC mergers; Data: Dealogic; Chart: Jacque Schrag/Axios

The great deal-making frenzy is over — or is it?

The big picture: It depends on how you look at it. Corporate M&A and private equity acquisitions have kind of fallen off a cliff this year.

Yes but: For all the uncertainty permeating the markets — not to mention it’s more expensive to fund deals — deal activity is still heading for one of the busiest years on record (though it just won’t top 2021).

State of play: A tremendous amount of uncertainty has entered the market this year — the war in Ukraine, sky-rocketing energy prices, and of course, recession risk.

  • “In situations of economic uncertainty, the ability to reach an agreement between a buyer and seller about what something will be worth in the future goes down,” Christian Correa, president and CIO of Franklin Mutual Series, tells Axios.
  • And deal activity has gone down since last year — just check out the chart above.

But, but, but: Precarious times offer opportunities of their own.

  • “The conversation now is largely around how to take advantage of the situation that is being presented by turbulent markets, and a world where the footing doesn't feel quite as stable as it has been historically,” says David Harding, an advisory partner at Bain & Company.
  • Another strategic shift: “Pre-COVID, everything was about finding the next disruption,” and acquiring new business lines, he says. “But we've seen a shift back to more scale-oriented [consolidation] deals.”

The bottom line: Despite all the uncertainty, Bain still forecasts that globally, 2022 will be the second largest year for M&A on record.

Go deeper