The announced decline in the number of mergers and acquisitions in the European market finally reached 9.5% in the third quarter of this year (against the expected 14.4%); a total of 3405 transactions took place. In accordance with the prediction, there was also a decrease in their total value (from the original 1,027 billion to 793 billion dollars). The outlook for the last quarter of 2022 predicts a decrease in the number of reported transactions to 3,127, i.e. a drop of about 8%. Macroeconomic issues remain the main factors: rising inflation, stagnant economic growth and supply chain disruptions. The future development scenario is primarily influenced by increasing market uncertainty, exacerbated by recent market developments in the United Kingdom.

"We have been living in almost constant uncertainty for almost three years now, one major event follows another. The current dramatic situation in the financial markets in Britain shows that the financial position of major economies is fragile and their creditors are nervous. This will certainly have an effect on the caution and restraint of investors and banks, and thus on the decline of M&A activity in Europe," comments Miroslav Linhart, senior partner in Deloitte's financial consulting department, on the results.

Further developments in Britain will significantly influence the market reality in the monitored territory (EU 27 + UK). If confidence in the UK government's ability is restored and the UK market recovers quickly, the last quarter of 2022 could see a slight recovery in activity in the M&A market, increasing the number of announced deals in Q3 from 3,405 to 3700. Favorable reported results on the part of large-cap companies (with a market capitalization exceeding $10 billion) and consistently strong results of large financial institutions, as well as a general strengthening trend towards the end of the year in terms of market cyclicality, may contribute to this result.

"After a record year, we have a year of decline. Repercussions from supply chain disruptions, along with geopolitical uncertainty caused by the war in Ukraine, are no doubt contributing to the decline in M&A volumes this year. However, we do not see the situation as negatively as others. Valuations have been falling for many months now and this trend will continue. However, luck favors the brave and especially the prepared. Looking at the past, it is clear that the period of purchases is coming, not at premium valuations. We continue to see a number of large transactions in the market that have the potential to complete at attractive valuations. In the coming months, we expect a number of restructuring cases to appear on the market, which will mitigate the ongoing decline in M&A," adds Jan Brabec, leader of M&A consulting at Deloitte.

The outlook for the next period is surrounded by uncertainty. The big unknown remains above all the reaction of the British market to the general market uncertainty caused by the government's recent actions. Although the government's tax cut program ultimately failed to materialize and the UK market gradually stabilized, the long-term impact on general market stability and confidence in government competence (which undoubtedly have a major impact on M&A activity) are still unpredictable. In the event of a downturn in market activity in the UK (which accounts for around 26% of total market activity in the territory under review), the impact on the number of recorded transactions will be significant. In such a case, it can be assumed that market activity in the M&A market will weaken by approximately 8.2%, and therefore that the total number of transactions on the European market will fall to 3127 transactions.