FirstFT: Global dealmaking posts a sharp fall

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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Four more stories in the news

1. US green subsidies may drive European companies closer to China America’s massive green subsidies plan risks backfiring by making “overtures and propositions” from Beijing more interesting and driving European companies closer to China, Valdis Dombrovskis, the European trade commissioner, warned yesterday.

2. Wealth managers suffer one of their worst years in a century Wealth managers are grappling with one of their worst years after high inflation and a sell-off in stocks and bonds hammered returns. “This year is one of the most significant years of wealth destruction in nearly 100 years,” said Renaud de Planta, who heads up the 217-year-old Swiss partnership Pictet.

3. Sunak urged to stick by plan to rapidly overhaul EU laws UK prime minister Rishi Sunak is under pressure from rightwing Tory MPs to stick to a 2023 deadline for reviewing or scrapping EU-era laws on the UK statute book, warning that Labour will exploit any delay at the next election.

4. Ukraine rocked by massive Russian missile barrage Scores of Russian missiles were fired at Kyiv and other Ukrainian cities yesterday in what officials described as one of the largest daily barrages of a months-long campaign targeting the country’s energy infrastructure.

How well did you keep up with the news this year? Take our FirstFT 2022 quiz to find out.

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