One in five mergers canned as volatility spooks dealmakers
Nearly 20 per cent of all mergers and acquisitions were canned this year as dealmakers took fright at the extreme turbulence shaking global markets, new data has revealed.
One in five deals were abandoned in 2022 while some 26 per cent were put on ice as private equity firms and corporate dealmakers opted to sit out transactions and wait for prices to settle, according to data taken between January and October from global mergers and acquisitions platform Datasite.
Just 54 per cent of deals were completed according to plan, the firm found.
Analysts at Datasite said turbulence in the market had sparked waves of nervousness and caused both buyers and sellers to ramp up due diligence processes before pulling the trigger on transactions.
“This year, sell-side processes on Datasite have been taking longer to complete versus last year, as dealmakers spend more time preparing deals and conducting due diligence, in the midst of choppier market conditions, rising interest rates, supply chain challenges and decreased demand in some cross-border deals,” said Merlin Piscetelli, chief revenue officer for Europe, the Middle East and Africa.
Datasite, which facilitates some 13,000 deals a year, said that October saw the sharpest rate of cancelled deals as uncertainty and volatility spread across sectors globally.
The findings come after official figures from the Office for National Statistics showed a total of 459 domestic and cross-border deals were completed in the third quarter of the year, nine down on the previous quarter and 159 fewer than the same period last year.
It marks a sharp slowdown from 2021 when global M&A hit record levels as buyers put stored up ‘dry powder’ to use in a post-pandemic deal frenzy.
Piscetelli said Datasite was confident of a rebound this year however as market conditions settled.
“Despite the disruption and risk, market leaders continue to deploy M&A strategies even during these volatile times,” he added.