M&A: Q3 Global Report 2022

October 11, 2022

During market volatility, M&A transaction volume can stall. History can teach us a valuable lesson when evaluating M&A opportunities during turbulent market conditions.

M&A soared in 2021 with volumes reaching $5.9T in value, leaving high expectations for 2022. While the numbers from the midyear report point to an overall lower value than 2021 (both YTD and extrapolated), an active market is still in place despite the economic uncertainty that has encompassed most of this year. 

M&A Deal Market Value

Here is a quick glance at the market from 2000-2022.

Source: Bain & Company

As shown above, M&A market value is expected to reach $4.7T. Given the inflationary pressure occurring throughout 2022 (8.3% CPI August 2022), the fact that transactions are still heavily influenced is a good indication of strategic growth.  

Regardless of economic conditions, the capital available for deals persists. According to PwC, there was $3.7T of cash and equivalents held by S&P 500 companies at the end of 2021 and $948.9B in dry powder held by private equity firms as of June 2022. 

Global Strategic M&A Deal Value

Source: Bain & Company

Q1 valuations were down significantly from 2021. However, Q2 numbers (both YTD and extrapolated), show immense growth with an even higher total than any 2021 number quarter. 

2022 M&A Deals So Far

The $10B+ deals rose 11% on the year, totaling $608B. The top two biggest M&A deals are U.S. based technology deals, which accounted for 1/4 of the market (an all time high).

Here are the top 5 biggest deals of 2022 so far:

1. Microsoft acquisition of Activision Blizzard (reference: Refinitv)

  • Cost: $68.7B

2. Broadcom acquisition of VMWare (reference: Refinitiv)

  • Cost: $61B 

3. AMD acquisition of Xilinx (reference: Investor’s Business Daily)

  • Cost: $49B

4. Oracle acquisition of Cerner (reference: DealRoom)

  • Cost: $28.3B

5. Prologis merger with Duke Realty (reference: DealRoom)

  • Cost: $26B

Here is an interesting view of global M&A rankings by Refinitiv:

With compressed valuations, buy-side will look for opportunities to drive inorganic growth via M&A. Below are some considerations when exploring a deal as a founder and operator. 

  1. Determine a clear strategy 
  2. Understand capital markets and broader economic conditions
  3. Find a great sponsor and investment bank to support you through the process
  4. Create a timeline and work with your sponsor closely during the deal process 
  5. Do an internal quality of earnings to ensure financials are defensible
  6. Keep the business running smoothly while going through due diligence

Contact us for a consultation on your next M&A deal. We’d love to provide guidance. hello@financewithin.com