Sep 30, 2022 - Economy

Global M&A just suffered its worst Q3 in a decade

Illustration of two hands about to shake, but being kept apart by a downward trending arrow.

Illustration: Aïda Amer/Axios

Everyone in the mergers and acquisition space knew that deal activity slowed in the third quarter, but it still hits different when the hard numbers arrive.

Driving the news: Global M&A volume was $642 billion between July and September, a 42% drop from the prior quarter and the lowest Q3 figure in a decade, per preliminary figures from Refinitiv. It's also the slowest overall quarter since pandemic-ravaged Q2 2020.

  • U.S. deals were down by a similar percentage, to $278 billion.
  • The number of global deals was at its lowest mark since Q1 2015. That's notable because it illustrates how the volume declines weren't just tied to falling valuations.

Pick your poison for the Q3 lethargy: Public stock market declines, which pulled some potential buyers and sellers out of the market. Rising interest rates, which chilled deal financing (particularly for leveraged buyouts). Inflation and the ongoing Ukraine war, which complicates everyone's math.

  • Plus the lure of summer vacation, after several straight years of nonstop deal activity.

Inside the numbers: The down arrows didn't discriminate by industry or geography.

  • Each of the 13 macro industry sectors tracked by Refinitiv is down year-over-year through three quarters. The largest dollar decline was media/entertainment (-59.9%), although it had the second-best deal volume decline (8.8%, trailing only real estate's -6.7%).
  • All five target regions were negative year-over-year, as were 15 of the top 20 countries (gainers included India and Italy).
  • Private equity-backed M&A dollar volume is down 25.5% year-over-year, while deal number is off 27.4%. Private equity's share of the overall M&A dollar pie climbed to 23.3% from 20.5%.

There were some winners: Adobe's takeover of Figma was the third quarter's largest announced deal.

  • Goldman Sachs, JPMorgan and Morgan Stanley lead the global advisory league tables for the first nine months of 2022, as they did for 2021.
  • Sullivan & Cromwell retained the top legal advisor spot, with Simpson Thatcher & Bartlett taking over second place from Latham & Watkins.

The bottom line: Fourth quarters typically top third quarters, although there's no macro reason to expect a particularly high rebound this year.

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