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Press Release

Global M&A Outlook 2023: Smaller deals and slower pace

December 14, 2022

WTW expects dealmaking to remain active despite ongoing uncertainty and major headwinds, with recession fears triggering a ‘lipstick effect’ as larger deals fall out of favour.
Mergers and Acquisitions

LONDON, December 14, 2022 — The global M&A market has remained remarkably resilient against a year of unprecedented uncertainty. Latest M&A research by WTW (NASDAQ: WTW) showed buyers outperforming the wider market1 as recently as the third quarter of 2022, based on share price performance of completed deals.

However, deal volume has slowed significantly compared to the record pace set last year. Multiple factors have weighed on M&A in 2022 - geopolitical turmoil, soaring inflation, rising interest rates and fears of a global recession - that will continue into next year. Such a challenging economic backdrop makes it harder for buyers, particularly those venturing beyond their own borders, to confidently predict the profitability of potential targets.

“An unprecedented number of disruptive forces have created headwinds for dealmakers, but they are also generating opportunities,” said Jana Mercereau, Head of Corporate M&A Consulting, Great Britain at WTW. “The fundamentals that drive dealmaking are still in place and, with valuations moderating after the historic levels reached in 2021, strategic and financial buyers alike will take advantage of better-priced opportunities for growth.”

5 M&A trends for 2023

Jana Mercereau shares her top trends for the year ahead:

  1. 01

    Return of the ‘Lipstick Effect’

    Buyers to increasingly focus on smaller deals, as recessionary fears trigger a ‘lipstick effect’: when economic downturns lead to a rise in spending on smaller, more affordable – rather than big ticket, more expensive – goods. For the first time in over three years no mega deals (valued over $10 billion) were closed during Q3 2022, and large deals (valued over $1 billion) were significantly down compared to the same period in 2021 (49 vs 67), according to WTW’s Quarterly Deal Performance Monitor, run in partnership with the M&A Research Centre at Bayes Business School.

  2. 02

    Opportunities in distressed M&A

    The difficult operating environment will drive an increase in companies jettisoning non-core assets in the pursuit of long-term value creation. Some deals will be strategic - energy firms continuing to divest carbon intensive assets – while the ongoing economic uncertainty will force other companies to sell assets - the retail and leisure sectors often having a higher operating leverage. This can create opportunities for buyers to expand product lines, services or supply chains at a reduced rate.

  3. 03

    Technology M&A: From defence to offence

    The need for speed in digital transformation across all industries, accelerated by an era of volatility, will keep dealmaking front and centre, with a wave of acquisitions in the AI and machine learning markets expected in 2023. Whether adopting new technologies and talent, or reaching new markets, M&A continues to be the fastest way for businesses to transform in order to remain relevant and resilient in today’s fast-changing world.

  4. 04

    Geopolitical impact

    Hit by multiple supply chain disruptions during the pandemic that are set to stay in 2023, companies will look to M&A transactions to boost their operational resilience. Vulnerabilities that continue to deliver distressed deal flow in the worst-affected sectors will also be a catalyst for businesses to reinvent their own supply chain networks. By onshoring or nearshoring suppliers closer to the point of production, businesses will aim to achieve greater security and resilience.

    Cross-border M&A activity has decreased in 2022, reflecting economic and geopolitical upheaval on the world stage. The pursuit of stability and predictability is likely to lead to more deals among trusted partners, signalling a shift to more selective ‘friend-shoring’ transactions in 2023.

  5. 05

    Spotlight on ESG

    ESG issues in dealmaking will remain in the spotlight in 2023, especially as acquirer due diligence will be more important than ever. With increasing numbers of investors seeing ESG as a fundamental driver of financial success, businesses will face mounting scrutiny and pressure for transparency on climate risk, social justice, sustainability and corporate governance. ‘Green’ due diligence is, without a doubt, on the up.

Mercereau said: “As we move into 2023, economic uncertainty will continue to define and challenge M&A activity, but there will also be opportunities. The same volatility will present its own impetus for dealmaking, as strategic buyers seek to capitalise on cut-price deals in order to combat current market challenges and realise transformational growth.”

WTW QDPM Methodology

  • All analysis is conducted from the perspective of the acquirer.
  • Share-price performance within the quarterly study is measured as a percentage change in share price from six months prior to the announcement date to the end of the quarter.
  • All deals where the acquirer owned less than 50% of the shares of the target after the acquisition were removed, hence no minority purchases have been considered. All deals where the acquirer held more than 50% of target shares prior to the acquisition have been removed, hence no remaining purchases have been considered.
  • Only completed M&A deals with a value of at least $100 million which meet the study criteria are included in this research.
  • Deal data sourced from Refinitiv.

About WTW M&A

WTW’s M&A practice combines our expertise in risk and human capital to offer a full range of M&A services and solutions covering all stages of the M&A process. We have particular expertise in the areas of planning, due diligence, risk transfer and post transaction integration, areas that define the success of any transaction.

About WTW

At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organisations sharpen their strategy, enhance organisational resilience, motivate their workforce and maximise performance.

Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you.


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

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