FirstFT: Global dealmaking posts a sharp fall


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Global dealmaking suffered a record fall during the second half of this year, as rising interest rates and economic uncertainty brought a period of frenzied activity to an abrupt close.

Mergers and acquisitions worth $1.4tn were announced during the six months to December, according to data provider Refinitiv, down from the $2.2tn agreed in the first half of 2022. It was the biggest swing, from one six-month period to the next, since records began in 1980.

The overall volume of deals struck globally in 2022 was down 38 per cent from 2021, the largest year-on-year drop since 2001. Still, it was at high levels by historical standards, above the global totals seen in 2016 and 2017.

The slowdown was the result of sharp interest rate rises, in the wake of rising inflation and the war in Ukraine, hitting confidence in global markets and increasing the cost of financing. Junk bond markets all but froze up, complicating private equity firms’ ability to fund deals.

Mark Sorrell, co-head of global M&A at Goldman Sachs, called 2022 “a tale of two halves” as a lack of cheap financing stalled the M&A market after the summer.

The number of megadeals worth more than $10bn fell sharply during the year, with 25 signed in the first half but just 11 in the second. “Financing for M&A is there, but it’s a much [higher] cost and it’s not available for all issuers,” said Sorrell.

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