The State of M&A in 2022 worries experts worldwide, as 2021 surpassed all records, and the news was constantly on the minds of entrepreneurs. However, the statistics for the first half of 2022 show that M&A activity has declined significantly as it has faced several economic obstacles. For now, their activity has dropped to 2019 levels, but M&A deals are expected to be critical to companies’ continued growth shortly.
Major M&A deal trends in 2022
As mentioned earlier, M&A deal activity has slowed markedly compared to 2021, and it’s back to where it was before the global coronavirus pandemic. At the time, the average number of M&A deals was about 25,000 in half a year. Now, across all the major regions, we can see a restart of M&A activity, especially in the Asia-Pacific region, where the level of this deal activity has declined the most. It’s down almost 30% since 2021. The reason for this was the macroeconomic obstacles and restrictions in some major cities in China, due to the pandemic. The value of mergers and acquisitions has also fallen to pre-event quarantine levels. Nevertheless, the first half of 2022 did see some large deals, namely four large deals worth more than $50 billion. In 2021, the number of such large sales was limited to just one.
New trends in mergers and acquisitions in various industries
All of the ongoing world events have a different impact on different deals:
Technology, Media & Communications
TMT is the leader in M&A today, as a quarter of all M&A deals occur in this industry, and one-third of their value in the first half of 2022. This is because digital adoption of new technologies remains a top priority in this year’s trends, with which TMT is very closely aligned. Also, by the year’s second half, demand for technology is expected to create opportunities for mergers and acquisitions in the technology and software industry that support infrastructure.
Financial services need digital opportunities because they are under constant pressure from regulators and disrupting platforms and financial technology. This means they still need M&A deals. Financial services are second only to TMT in the number of M&A investments. In 2022, the industry is still expected to see a continued focus on technology, increased demand for sustainable investment options, and lower valuations. Higher M&A activity is also forecast for the second half of the year.
The consumer market’s M&A activity will depend entirely on how the volatile economic outlook affects consumer confidence and spending. Consumers are a very fickle factor. This industry will need to learn to adjust quickly to new conditions. There’s every chance that consumer preferences will create a favorable environment for mergers and acquisitions as companies modernize their business models and position themselves for future growth.
Industrial manufacturing has a very favorable M&A environment because of the need for technology development, supply chain investment, and labor.
The energy industry continues to transition, and there is an increased focus on supply chain security. These factors are driving mergers and acquisitions in critical minerals and energy supply.
The strong growth in biotech and innovative new technologies, such as mRNA, gene therapy, and telemedicine opportunities, capture investor interest. Large pharma companies will likely do more small deals to meet inorganic growth targets and avoid regulatory scrutiny and the complexity associated with larger deals.