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.