Looming Recession Curbs Global M&A Activity, as Q2 US Activity Slows 40%

Global deal-making is entering tumultuous waters, as various factors like inflation and a stock market rout make corporate boards less willing to expand through acquisitions, Reuters reported Saturday (June 25).

The Russian invasion of Ukraine in February, along with the news of a possible recession, have only made the waters murkier for mergers and acquisitions (M&A). Dealogic data found that the value of announced deals had fallen 25.5% year on year, hitting $1 trillion.

M&A activity in the U.S. dropped 40% in the second quarter, and it was also down 10% in the Asia-Pacific region, per the report.

“Companies are standing back from M&A in the short term as they are more focused on the impact of a recession on their business,” said Alison Harding-Jones, Citigroup’s EMEA M&A head. “The timing for dealmaking will come but I don’t think it’s quite there yet.”

The only region where deal-making wasn’t crashing was in Europe, with activity there up 6.5% for the quarter. This was mostly because of a large amount of private equity deals, including a €58 billion ($61.2 billion) take-private bid for Atlantia, an Italian infrastructure group, from the Benetton family and Blackstone.

PYMNTS wrote in April about the fall of worldwide M&As, which had been impacted by the inflation, more regulations and the Russia-Ukraine war.

Read more: Global M&As Crushed Under Weight of Inflation, Regulation, War

At the time, dealmaking was down 23% compared to 2021. The first quarter of this year saw $1 trillion in deals signed, with the biggest one coming from the $75 billion acquisition bid for Activision Blizzard.

The second-biggest was Prologis’ purchase of Mileaway, referring to Blackstone’s European warehouses, for €21 billion.

There had been a reduction of M&A deals in every continent, per data from Refinitiv, with that coming after a two-year period where there had been record deal-making due to COVID stimulus measures and other factors.