M&A, IPO activity fell throughout 2022

Dive Brief:

After heightened activity in 2021, global merger and acquisition deals fell sharply in 2022, according to a recent S&P Global Market Intelligence report.
The total value of global M&A fell 35.8% year over year to nearly $3 trillion, and the number of IPOs dropped 48.7%, per S&P’s Global Q4 2022 M&A and Equity Offerings report. Company valuations and market volatility were impacted by a mix of increased interest rates and a concerned macroeconomic outlook.
Although the digital commerce sector also experienced a decrease in M&A deal volume last year (a 9% decrease compared to 2021), it was still higher than pre-pandemic levels, according to a separate report from Hampleton Partners. For online retail, there was a quarterly decline in transaction volumes following highs during Q2 and Q3 2021. Annual transaction volume was at its lowest since 2015, and there was a 32% drop in number of deals for the year.

Dive Insight:

Despite the declining numbers, the M&A activity during 2022 might just be a “new normal” according to some experts.

“The downturn in digital commerce deal volume from the second quarter mirrors the overall decline of the M&A market,” Hampleton Partners Director Ralph Hübner said in a statement. “But we see in these numbers a ‘new normal’, which is significantly higher than pre-pandemic. Acquirers are continuing to seek new digital technologies, but have become more selective and risk averse. We still see a large market with strong multiples for mature and healthy companies in digital commerce.”

Hampleton’s data outlined that Q1 2022 had a record-breaking start with 699 deals in digital commerce. However, the subsequent quarters held a steady decline with 544 deals in Q2, 451 in Q3 and 473 in Q4.

The number of global M&A transactions overall, however, was lower in each quarter of 2022 compared to 2021, per S&P. Additionally, the total value of global equity issuance was $351.76 billion, marking a 66.6% drop.

Data from CB Insights’ 2022 State of Venture report also found a 31% year-over-year drop in IPOS last year. There was also an 86% year-over-year decline in unicorn valuations during the fourth quarter, with only two retail tech companies emerging as unicorns in Q4 2022, compared to 30 during the same period in 2021.