M&A Hits Multi-Year Low: S&P Global Market Intelligence report unveils challenging landscape

New Delhi [India], October 27 : In a report released today by S&P Global Market Intelligence, the global mergers and acquisitions (M&A) market has hit multi-year lows, presenting a challenging landscape for dealmakers.
During the third quarter of 2023, only 8,775 M&A deals were announced across the world, marking a significant 17.3 per cent decline from the previous quarter and a striking 28.3 per cent drop from the same period the previous year, according to S&P Global Market Intelligence report,
Although the third quarter saw some promising signs in equity issuance due to a flurry of initial public offerings, this momentum has been dampened by a lacklustre performance by companies that recently went public.
The outlook for the M&A sector poses several challenges. Economic uncertainty and the possibility of sustained high-interest rates are contributing to a less favorable environment for deals.
Additionally, geopolitical tensions, exemplified by the recent Israel-Hamas conflict, are creating further headwinds for potential transactions.
"Heightened geopolitical concerns have added an extra layer of uncertainty to an already complex macroeconomic landscape, and such uncertainty is seldom conducive to successful dealmaking," noted Joe Mantone, lead author of the S&P Global Market Intelligence report.
Mantone added "While the Federal Reserve is nearing the conclusion of its rate-hiking cycle, gaining clarity on peak interest rates could breathe new life into transaction activity. However, should rates remain elevated, it will increase financing costs and pose challenges to the viability of many deals."
Key highlights from the quarterly report include a worrisome trend of global equity issuance declining for six of the last seven quarters, a 9.1 per cent drop in the total value of global initial public offerings (IPOs) compared to the previous quarter, and a substantial 25.8 per cent decline in IPO value compared to the previous year, settling at USD 33.80 billion.
One particularly significant development is that, for the first time since the outbreak of the pandemic, the number of global M&A announcements has dropped below 10,000 during the third quarter.
The report from S&P Global Market Intelligence offers comprehensive insights into global M&A and equity issuance trends, shedding light on the industries and regions experiencing the most activity.
It delves into transactions with the highest valuations and strategies employed by larger players in response to prevailing trends within various sectors.
S&P Global Market Intelligence has consistently produced this quarterly global M&A and equity offering report since the first quarter of 2018.
S&P Global Market Intelligence emphasizes that its opinions, quotes, and credit-related analyses are expressions of opinion as of the date they are conveyed, and they do not constitute statements of fact or recommendations for the purchase, retention, or sale of any securities or investment decisions.
The analyses do not address the appropriateness of specific securities.