Looking at the Global M&A Environment

August 2, 2022

The most recent look at the global mergers and acquisitions (M&A) picture from Pitchbook is out. How did things perform in the second quarter of 2022? Here’s a look.

The Overall Picture

The first look is of the overall M&A picture in North America. Activity peaked in the fourth quarter of 2021 – since then, activity has declined by approximately 30.2% and 37.6%, respectively, with about 4,571 deals closed and a combined value of $547.7 billion. Although activity is cooling, overall activity is still healthy compared to historical counts. At $547.7 billion, activity is still above its historical average as strategic buyers took stock of market volatility to find attractive growth prospects from cyclical companies.

Source: Pitchbook

The Share of M&A Value by Sector

The next view is of M&A activity by sector. Overall, M&A managers showed increasing interest in the IT sector, with about 20% of all activity in this sector. The only sector that showed greater interest was Business Products & Services, which captured about 30% of M&A managers’ interest. In third place was Consumer Products & Services at around 15%. The remaining members included Healthcare, Energy, Financial Services, and Materials & Resources.

Source: Pitchbook

A View by Payment Type

The next view is of M&A activity by payment type. Overall, by far the most common source of funding was cash at about 60%. The second most popular source of deal funding was a combination of stock and cash at around 25%, followed by stock at around 15%.

Source: Pitchbook

The Share of M&A Value by Bucket Size

The next picture is the share of M&A value by the size of the bucket. So far through the first half of 2022, the largest slice of activity was in deals valued at $5 billion or higher, accounting for around 25% of all activity. In second was deals valued between $500 million and $1 billion, capturing about 15% of all deals. Rounding out the top three were deals valued at $1 billion to $5 billion and deals valued at $250 million to $500 million, with both capturing around 10% of the deal value. Smaller deals accounting for the remaining activity.

Source: Pitchbook

Summing Up

Overall, global M&A activity continued its modest slowdown in deal value and volume over the course of the second quarter. This came at a time when the S&P 500 suffered its worst first half of the year since 1970. Time will tell how activity will shape up for the remaining two quarters of the year.

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