Persistent Depressed Deal making: 2023 Sees Second Consecutive Year of Sluggish M&A and Equity Issuance in Fourth Quarte

The trend of rising interest rates that commenced in 2022 persisted throughout 2023, exerting a dampening effect on deal making activities, as highlighted in the Q4 2023 M&A and Equity Offerings Market Report recently released by S&P Global Market Intelligence. Despite a resurgence in equity markets during 2023, equity issuance failed to follow suit. Global equity issuance witnessed a significant decline of 19.2% year over year in 2023, amounting to $295.52 billion. This decline stemmed from a comparatively low base after experiencing a drastic 65.3% plunge in 2022, falling to $365.82 billion from its 2021 level of $1.055 trillion.

While the fourth quarter did showcase some positive indicators for M&A transactions with the announcement of the year’s largest deals, the total value of global M&A announcements for 2023 decreased by 26.7% year over year to $2.27 trillion, alongside a 21.4% drop in the number of announcements to 40,675. This decline becomes even more pronounced when juxtaposed with the peak year of M&A activity in 2021, witnessing a 51.4% decrease in value and a 32.7% decrease in the number of announcements.

Joe Mentone, the lead author of the report at S&P Global Market Intelligence, acknowledged that 2023 marked the second consecutive year of downturn for M&A activity. However, he expressed cautious optimism for the outlook, attributing it to the substantial transactions towards the end of the year and the potential stability or reduction in interest rates, which he believes would favour year-over-year growth in M&A for 2024. Nonetheless, challenges persist, including geopolitical unrest and concerns about a potential recession, which continue to weigh on the minds of dealmakers and executives. These factors are likely to temper the prospects for a swift recovery in the initial public offering (IPO) market, at least in the early part of 2024.

Key highlights from the quarterly report include:

  • The fourth quarter marked the eighth consecutive period where total global issuance remained at or below $100 billion, following an average quarterly issuance of $232.39 billion from the beginning of 2020 through 2021.
  • In Europe, the total value of IPOs decreased by 64.1% quarter over quarter to $3.69 billion, although the number of deals remained relatively stable at 43, down from 47 in the third quarter.
  • The value of global M&A announcements exhibited sequential and year-over-year growth in the fourth quarter, primarily attributable to two sizable transactions that accounted for 27.3% of the total for the period.

The quarterly report offers a comprehensive overview of global M&A and equity issuance trends, providing insights into the sectors and regions witnessing the highest activity levels. It also delves into deals with significant valuations and strategies adopted by major players, illuminating broader industry trends. S&P Global Market Intelligence has been publishing this quarterly global M&A and equity offering report since the first quarter of 2018.

For those interested in obtaining a copy of the Q4 2023 Global M&A and Equity Offerings Report, please contact [email protected].

It’s important to note that opinions, quotes, and credit-related analyses provided by S&P Global Market Intelligence are expressions of opinion as of their respective dates and not factual statements or recommendations regarding securities transactions or investment decisions. They also do not address the suitability of any specific security.

About S&P Global Market Intelligence:

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S&P Global Market Intelligence operates under S&P Global (NYSE: SPGI), a prominent provider of credit ratings, benchmarks, analytics, and workflow solutions in global capital, commodity, and automotive markets. With its array of offerings, S&P Global assists numerous leading organizations in navigating the economic landscape, facilitating informed decision-making for the present and future.

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