Will the global M&A market take off again in 2023?

Last year is being termed a ‘tale of two halves’ for M&A activity. While global M&A saw record levels of dealmaking in the first half of the year, the second half experienced a considerable slowdown as the market was impacted by the war in Ukraine, inflationary pressures, rising interest rates and continued political uncertainty. 

The question for 2023 is how the M&A market responds to the ‘perma-crisis’ state we are now living through with geopolitical tensions raising political, economic and energy security issues. 

Inflationary pressures are challenging asset valuations in deals, and in some cases testing business viability. The rise in interest rates around the world, and associated increased cost (and lesser availability) of debt, may make some deals more difficult.

However, despite these challenging conditions, M&A markets are far from closed. Among the drivers of ongoing deal activity are carve-out transactions, as large companies look to reshape their portfolios in order to shore up balance sheets and deliver value to shareholders, and transformational deals as they seek to drive change in their business towards digitalisation, energy transition or rebalancing of supply chains.