ANALYSIS: Despite Q4 Boost, 2023 M&A Deal Volumes Disappoint

In late 2022, I thought that 2023’s mergers and acquisitions activity would return to pre-2021 levels—I was wrong. M&A deal volumes went from bad to worse in 2023, and, for the first time in 10 years, global M&A deal volumes—pending and completed M&A transactions covering a wide variety of transaction types—failed to break the $3 trillion mark.

But it’s what lies behind the totals that helps paint a more nuanced picture of 2023. Q4 2023 had a higher deal volume than Q3 2023, for example, and the last quarter included some mega deals and a lot of activity late in December. An examination of quarterly deals volumes as well as deal counts explain why 2023 wasn’t only about missing the mark.

A Look at the Data

The M&A market finished the year with $2.9 trillion in total global deal volume. Controlling-stake mergers and acquisitions similarly finished 2023 with the worst total deal volume since 2013 ($2.2 trillion).

On a more positive note, 2023’s global M&A deal volume experienced the traditional Q3-to-Q4 increase after 2022 failed to do so. Q4 2023, however, had the second-lowest Q4 global M&A deal volume ($872.5 billion) in the last 10 years; only Q4 2022 ($774.2 billion) was lower.

Controlling-stake M&A deals haven’t missed a Q3-to-Q4 increase in deal volumes in 10 years, and fortunately, Q4 2023 kept this trend alive, albeit with the third-lowest Q4 deal volume ($680.4 billion) since 2014. Only Q4 2018 ($670.2 billion) and Q4 2022 ($551.6 billion) had lower deal volumes.

Annual deal counts for both categories of M&A deals were also down. 2023 saw a dismal 27,962 controlling-stake M&A deals and 48,833 global M&A deals, the lowest annual deal counts for each category in the last five years.

Quarterly deal counts were cause for meager optimism. Global M&A deals and controlling-stake M&A deals saw increases in deal counts from Q3 2023 to Q4 2023, which didn’t happen for either category of M&A deals in 2022 and was the first time in a decade that there was no quarter-to-quarter increase.

What Does This Mean for M&A in 2024?

The M&A market’s performance in 2022 and 2023 was lackluster, to say the least. The drop in deal counts and deal volumes is likely all the more disappointing because the record-breaking post-pandemic surge in 2021 didn’t continue, and was instead followed by a dramatic drop in deal activity.

Many of the factors that seemed to contribute to a down year for M&A in 2022 held true in 2023, and it’s likely that those factors will continue to affect M&A activity in 2024. For example:

• Geopolitical uncertainties and tensions persisted around the world, and 40 countries will have national elections this year.
• From an economic perspective, 2023 saw higher financing costs and lower valuations, and there are continued concerns about inflation and the overall state of the economy (e.g., will there be a recession?).
• Antitrust enforcement and regulatory developments continued to take shape and will likely further impact the M&A market and its participants.

Stay tuned to see how the M&A market plays out.

Bloomberg Law subscribers can find related content on our M&A Deal Analytics resource.

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