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Q2 2023 – M&A deals plunge as tougher conditions than expected spook markets

Quarterly Deal Performance Monitor – Q2 2023

July 17, 2023

Buyers are shifting gears to adapt to a more cautious M&A environment, although deal conversations have continued throughout this period of uncertainty.
Mergers and Acquisitions

Global M&A suffers record decline in the first half of 2023 as interest rate rises and economic uncertainty hit financing, according to research from WTW’s Quarterly Deal Performance Monitor (QDPM) [1].

Run in partnership with the M&A Research Centre at The Bayes Business School, the WTW data reveals deal activity slowed significantly around the world during the first half of 2023, with a total of 280 deals completed compared to 441 during the same period in 2022. This represents a 37% drop in volume and the lowest figure for the first half of a year since 2009.

The challenging macroeconomic conditions are acutely evident in the North American market, where volume fell for an unprecedented six consecutive quarter from a near all-time high of 173 deals in the third quarter of 2021 to just 61 deals between April and June 2023.

Based on share price performance, the data shows that global dealmakers underperformed the wider market by -2.1pp (percentage points) for acquisitions valued over $100 million between January and June 2023. This represents a marked decline following the positive performance of +4.6pp in the second half of 2022. However, despite the continued volatility, global M&A still achieved an overall positive performance of +1.4pp for the last 12 months.

Jana Mercereau, Head of Corporate M&A Consulting, Great Britain at WTW, said: “A perfect storm of higher inflation, interest rates, capital costs and regulatory scrutiny, combined with major geopolitical headwinds and a banking crisis, have triggered a steeper drop-off in M&A activity than anticipated by the market.

“Buyers have had to shift gears to adapt to a more cautious M&A environment, although soft-to-serious deal conversations having continued throughout this period of uncertainty. With these disruptive trends expected to continue into the second half of 2023, potential buyers will be kicking the tyres a bit harder as they seek deals to address strategic priorities, expand into new markets and fill capability gaps.”

The deal performance during the first six months of 2023 would have been substantially worse if not for the Asia-Pacific region, where buyers continue to outperform the rest of the world. APAC acquirers outperformed their regional index by +10.9pp. With 72 deals closed in H1 2023, the region still saw a 25% drop in volume compared to H1 2022 (96 deals).

In contrast to the APAC region, North American acquirers underperformed their index between January and June by -5.9pp, while dealmakers from Europe underperformed their regional index by -8.3pp. UK buyers underperformed by -4.4pp during the same period.

The WTW data also shows:

  • Only three mega deals closed in the first half of 2023 compared to 12 deals in H1 2022.
  • Performance of acquirers in North America for the second quarter of 2023 at -10.3pp is the second worst on record, exceeded only by the same quarter in 2020. Dealmaking performance in Europe during the last three months at -10.8pp is the worst on record.
  • Asia Pacific buyers have now achieved a positive performance for eight consecutive quarters. To put this in context, buyers in North America and Europe have only recorded two and one positive quarters respectively during the same period.
  • Intra-regional deals have increased for four successive quarters (compared to cross regional deals) and intra-sector deals also experienced a big jump from 57% in the first quarter of 2023 to 67% in the latest quarter (compared to cross sector deals), indicating a clear trend of buyers seeking deals closer to home.

Mercereau said: “When inflation stabilises and credit markets re-open, we expect deal appetite to increase considerably fuelled by pent-up demand with digital transformation, portfolio rebalancing and ESG issues continuing to be key drivers.

“Larger deals will remain tough to pull off due to increasing anti-trust and regulatory pushback. Instead, companies are more likely to pursue small to midsize deals, which are easier than megadeals to complete and lower risk in today’s difficult financing environment. But in the race to acquire – whatever the size of deal – due diligence that is faster, deeper and better focused, combined with a plan for successful integration, will prove even more critical in a volatile market.”


  1. The M&A research tracks the number of completed deals over $100 million and the share price performance of the acquiring company against the MSCI World Index, which is used as default, unless stated otherwise. Return to article
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