Global mergers and acquisitions (M&A) activity shrank to its lowest level in more than a decade in the first quarter of 2023, as rising interest rates, high inflation and fears of a recession soured the appetite of companies for dealmaking.
M&A volumes during the first quarter slumped 48% to $575.1 billion as of March 30, compared to $1.1 trillion during the same period last year, according to data from Dealogic.
A banking crisis that started in the United States this month with Silicon Valley Bank and spread to Europe with the Swiss government-orchestrated sale of Credit Suisse Group AG to UBS Group AG (SIX:UBSG) roiled markets and stopped many deals in their tracks, investment bankers and lawyers said.
“The first quarter had extraordinary levels of volatility and uncertainty – more than expected going into the year. And that has the impact of postponing some announcements,” said Anu Aiyengar, global head of M&A at JPMorgan Chase & Co. (NYSE:JPM)
M&A volumes dropped 44% to $282.7 billion in the U.S. and 70% to $81.87 billion in Europe. Deal volumes in Asia Pacific fell 29% to $176.1 billion.
Graphic: Europe among the hardest hit, https://www.reuters.com/graphics/GLOBAL-DEALS/movakwaoqva/chart.png “Having a well-functioning financing market is a critical ingredient for M&A. Market volatility has clearly been a challenge and weighed on deal volumes in the quarter,” said Brian Haufrect, co-head of M&A for Americas at Goldman Sachs Group (NYSE:GS).
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