It has not been a great start to the year for the global mergers and acquisitions market, with deal volumes down across all regions. Burhan Khadbai reports.
Global mergers and acquisitions (M&A) volumes totalled $989.5bn in the first quarter of 2022, down by 20% on the same period last year, making this the slowest opening quarter since 2020, according to data from Refinitiv Deals Intelligence.
The number of deals has also decreased by a similar amount, down by 19% from last year. It is also the first quarter that has registered global M&A volumes under $1tn since the second quarter of 2020. However, the number of deals with a value greater than $10bn has increased by 38% compared with last year, but smaller ticket deals between $1bn and $5bn have fallen by 40%.
The Africa and Middle East region has seen the biggest drop in M&A activity year-on-year, down by 56% from $48bn to $21.26bn, followed by the Americas, down by 23% from $723.36bn to $554.09bn and Asia-Pacific (excluding Japan), down by 22% from $209.45bn to $162.52bn. By contrast, Europe is down by only 4%, from $243.17bn to $233.2bn.
In terms of sectors, technology accounted for the biggest share of global M&A activity in the first quarter of 2022, with $254.6bn or 25.7% of all deals, down by 1% compared with the same period last year. Within the technology sector, activity in software and internet software and services accounted for 79% of all deals in this segment. The $68.7bn acquisition of Activision Blizzard by Microsoft was the biggest technology M&A deal in the first quarter.
Financials represented the second biggest sector for global M&A, with $121.8bn or 12.3% of all deals, down by 34% compared with the same period last year. Some of the biggest deals in the first quarter included the $13.5bn acquisition of First Horizon by Toronto-Dominion Bank and the $11.5bn offer for Alleghany Corp by Berkshire Hathaway.
The real estate sector had its strongest opening quarter on record, with $120.8bn in deals, representing 12.2% of all M&A activity in the first quarter, up by 83% compared with the same period last year. Meanwhile, the energy and power sector accounted for $107.6bn or 10.9% of all deals in the first quarter, down by 16% compared with last year and the slowest opening quarter in two years.
Global private equity-backed M&A totalled $290.2bn during the first quarter, up by 21% compared with last year and a record for an opening quarter. However, by number of deals, global private equity-backed M&A is down by 23% compared with last year.
Cross-border M&A reached $321.8bn in the first quarter, down by 22% compared with last year and the slowest opening quarter since 2020. In total, cross-border M&A deals account for 33% of total M&A activity this year.
M&A deals involving emerging markets totalled $181.5bn in the first quarter, down by 32% on the same period in 2021. Emerging market countries account for 18% of all M&A deals this year. China is the most acquisitive and targeted nation among emerging market countries, representing 31% and 34% of total activity this year, respectively.
Goldman Sachs has kept its position as the top global M&A financial advisor for the first quarter, with a 34.8% market share, up from 28.5% in the same period last year. Some notable moves in the top 10 ranking include big leaps from Allen & Co and Rothschild & Co, which are up to seventh and ninth spots from 39th and 18th last year, respectively.
An estimated $26bn-worth of fees have been earned by investment banks globally so far in 2022, down by 32% from last year’s record level but in line with levels from the previous four years. M&A fees are up 12% for the year to date to $9.2bn, to the highest level over this period since Refinitiv’s records began in 2000. However, fees in equities, bonds and loans are down for the year to date, by 75%, 21%, and 26% respectively.
