In the first quarter of 2023, macroeconomic challenges such as inflation, rapid monetary tightening and a less than optimistic economic outlook will lead to a significant decline in M&A activity. The index forecasts 2,940 announced deals for the first quarter of this year. In the fourth quarter of 2022, the total was 3,680 deals, so the model predicts a decline of more than 20%. Total deal value (measured as the sum of the value of deals done in the last twelve months) also declined, from $809.9 billion to $677.4 billion. The current development on the market portrays the inherently adverse relationship between uncertainty and the M&A markets. In this context, the market activity – in terms of both values and volumes – can be characterized as a function of economic certainty, interest rates, and general macroeconomic environment. In this context, despite the sharp drop in transactions, the market activity still carries the potential for a speedy recovery, with health of the banking system, strong cash balances, and continued expansion in cross-border deals working to offset the severe headwinds on the market.

The manufacturing industry remains a dominant force in the M&A landscape, accounting for 22 % of both the total value and number of transactions. The Financial and TMT sectors follow closely behind. Although the TMT sector makes up a greater proportion of the total number of transactions (approximately 23 %), it only contributes about 15 % of the total transaction value. In contrast, the financial sector, where larger deals occur more frequently, makes up 22 % of the total transaction value, despite accounting for only 18 % of the total transaction number.

Mergers and acquisitions activity was negatively impacted in 2022 due to significantly higher interest rates and the uncertain outlook for the macroeconomic environment.