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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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