Global M&A Report | Market Review 2023
Market Review and Trends
The global M&A market faced significant challenges in 2023, recording its second weakest year over the past decade. With an aggregate deal value of approximately $3 trillion, the market saw a 15.8% decline compared to 2022, marking the weakest performance since 2013, excluding the pandemic year of 2020. The market is down 35.5% from its peak in 2021, and if 2024 brings another contraction, it would be the first time since 2007 that the global market has seen three consecutive years of decline. However, there is cautious optimism for a rebound in 2024, particularly as the Federal Reserve may begin reducing interest rates in March.
Regional Performance and Global Dynamics
North America, despite a challenging year, experienced a notable uptick in Q4 2023 with total deal values reaching $497.1 billion—a 17.8% year-over-year increase. However, deal counts slipped by 6.6% year-over-year. Energy was a standout sector, achieving its strongest performance in nearly a decade, largely driven by four mega-deals in Q4. In contrast, the Business-to-Consumer (B2C) sector struggled with a 28% decline in deal value and challenges securing debt financing for larger acquisition packages.
Valuations and Market Sentiment
Valuation multiples varied significantly across sectors. The Business-to-Business (B2B) sector saw stable M&A activity with a slight increase in deal count and a marginal contraction in value. The Financial Services sector, however, faced its second straight year of contraction, influenced by macroeconomic headwinds and sector-specific challenges. Despite these difficulties, sectors like IT and Healthcare are expected to see robust M&A activity in 2024, driven by ongoing digital transformation, AI adoption, and value-based care initiatives.
Future Outlook
Looking ahead, the global M&A market in 2024 is poised for moderate growth, with inflationary pressures expected to ease and interest rates potentially declining. While the regulatory environment may see continued scrutiny, particularly in IT and Healthcare, industry tailwinds are likely to drive renewed M&A activity. However, geopolitical tensions and supply chain disruptions remain key risks that could impact the M&A landscape.