Global M&A: deal makers to miss US$3 trillion mark for first time in 10 years

Deal makers are coming to the end of their worst year for mergers and acquisitions (M&A) in a decade, having seen hopes of any meaningful recovery choked off by reluctant lenders and geopolitical flare-ups.

The value of M&A and related transactions has declined by roughly a quarter this year to US$2.7 trillion going into the holiday period, data compiled by Bloomberg shows. That is the lowest annual total since 2013, which was also the last time deal values failed to hit US$3 trillion in a calendar year, the data shows.

The slump leaves investment bankers facing a bleak bonus season and more job cuts if things do not improve in 2024. And with interest rates and geopolitical tensions still running high, challenges to deal making remain, according to Jay Hofmann, co-head of M&A for North America at JPMorgan Chase, who likened current conditions to those experienced during the dot-com crash in 2001.

“It has just been a lot harder to get things done this year and people have looked for reasons not to do deals. I don’t really see that changing very much right now,” Hofmann said. “People aren’t inclined to look past challenging issues to get deals through.”

A lack of activity by private equity firms has again been one of the major drags on deal-flow in 2023. Buyout firms have spent 36 per cent less on acquisitions this year, compared with 2022, amid struggles in securing debt financing for big deals and price disagreements with sellers – even when offering hefty premiums.