An S&P Global Market Intelligence report revealed that mergers and acquisitions by North American companies declined in the fourth quarter of 2022. S&P said this represented a decline compared to 2021 due to rising interest rates and a slowing economy that discouraged companies from deal-making. The report highlighted that M&A activity was particularly slow in the second half of 2022, with $517.85 billion in deals. This represented a 38.2% decline compared to the year’s first half. For perspective, however, 2021 was a record-high year for deal-making.
Why do we care?
This is broader than technology companies and includes the whole North American market.
Interestingly, Arlin Sorensen of IT Nation Evolve and Connectwise noted some observations he already sees in his daily email. Due diligence is increasing, earnouts are becoming more common, valuations are slipping, particularly for lower EBIDTA companies, oversight is increasing, and there is an increase in both mergers of equals and a steady interest in building platform companies.
M&A remains a buzzy but small portion of the business sector. If you’re interested in M&A, great, but don’t be led to believe that the trend is dominant. M&A is being heavily discussed by those with a vested interest in M&A.