Global mergers and acquisitions (M&A) activity fell 36% year-on-year in the second quarter, but investment bankers and lawyers expressed optimism that the stock market’s recovery will gradually restore chief executives’ dealmaking confidence.
The total value of M&A fell to $732.82 billion in the second quarter of 2023 from $1.14 trillion in the second quarter of 2022, according to Dealogic data as of June 29, as high interest rates and a stand-off over the U.S. debt ceiling kept dealmakers on edge.
“Global uncertainty is what is impacting M&A most – it just makes people uncomfortable. It’s easier to say, I’ll pass on a deal – nobody gets fired for passing on a deal. But, we all talk about the deal that never should have happened,” said Michael Aiello, chairman of the corporate department of law firm Weil, Gotshal & Manges LLP.
The quarterly tally was higher than the first quarter of 2023, when $601.32 billion in deals was announced, giving grounds for optimism to those who argue the recovery in the M&A market has started.
“We are bottoming out. In order for companies to continue to compete locally and globally they will have to grow organically, especially inorganically. We will see an increase in strategic activity,” said Raymond McGuire, president of investment bank Lazard Ltd (LAZ.N).
M&A volumes in the United States declined by 30% to $318.4 billion, while Europe and Asia Pacific volumes shrank 49% and 24% respectively.