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M&A marks 2nd-worst year in a decade

Total deal values of private market M&A marked some of the lowest figures since 2013.

M&A just logged its second-worst year in a decade.

Last year’s total M&A deal value was among its lowest since 2013. At an estimated $3 trillion, it is second only to dealmaking during the lockdown-induced global slump of 2020, according to PitchBook’s 2023 Annual Global M&A Report.

Since 2021’s dealmaking peak, total global M&A activity has tumbled 35.5%, suppressed by higher interest rates and a valuation gap between buyers and sellers.

Last year’s figures fell slightly below pre-pandemic dealmaking. From 2015 to 2019, total M&A deal value averaged $3.4 trillion, which is $400 billion above 2023’s total.

M&A dropped in sectors including B2C businesses, healthcare and financial services. The latter, for example, saw deal values decline for the second year in a row, totaling a 51.4% decrease from the sector’s Q3 2021 peak. And healthcare M&A activity fell below 2020’s figures.

Still, glimmers of hope, like the impending two-year anniversary of the beginning of the Federal Reserve’s rate hike campaign, have facilitated a slow return to dealmaking.

In fact, the energy sector had robust M&A activity in 2023, particularly in the year’s second half. Fueled by consolidation in the oil and gas industry and consistent deal flow in the cleantech sector, energy deal value reached $380.8 billion last year, up 8.26% from 2022.

What’s more, M&A deal value declines in 2023 were not nearly as pronounced as they were in 2022. For example, from Q3 2021 to Q3 2022, total M&A deal value fell 37.3%; during the same period from Q3 2022 to Q3 2023, deal value fell only 3.4%.

Finally, valuation multiples are showing signs of stabilization as deals recalibrate to reflect the higher-for-longer interest rate environment.

In the report, PitchBook analysts say Q4 2023 may mark the beginning of the market’s slow mend.

Correction: An earlier version of this article misstated the combined value of deals announced in 2023 and a four-year average. The total was $3 trillion, not $3 billion, and average annual value from 2015 to 2019 was $3.4 trillion, not $3.4 billion. (Jan. 31, 2024)

Featured image by Alexander Spatari/Getty Images

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  • jessica-hamlin-headshot.jpg
    Senior funds columnist Jessica Hamlin writes about limited partners for PitchBook News, based in New York. Jessica is also the lead writer of the Capital Pool weekly newsletter. Previously she wrote about private equity for Institutional Investor in New York. Jessica is a graduate of the Grady College of Journalism and Mass Communication at the University of Georgia.
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