“The sharp decline in M&A deals completing this quarter is the inevitable hangover effect following an outstanding year in 2021, compounded by the macroeconomic and geopolitical headwinds that bruised the market last year,” said Jana Mercereau, head of corporate M&A consulting, Great Britain, at WTW. “At the same time, M&A markets are far from closed. The number of deals we’re seeing in the pipeline has not dropped at all, but many have made slower progress towards completion, or have paused, as buyers adopt a ‘wait and see’ approach. Dealmakers remain fairly bullish and believe M&A activity will increase in the second half of 2023 as markets stabilise and interest rates level.”
Cross-sector deals flourish
The need to adopt new technologies and talent, reach new markets, and overhaul supply chains has spurred cross-sector deals to their highest level since WTW’s M&A survey began in 2008.
The survey also found that the median time to close deals in the first quarter was the slowest since 2008, with 71% of deals taking at least 70 days to complete, up from 53% less than 18 months ago. This trend is directly linked to the rise in cross-sector acquisitions, which generally take more time to close, as well as a greater need for more robust due diligence.
“There are tremendous opportunities to explore for acquiring companies, especially corporates and PE funds with high levels of capital,” Mercereau said. “Some sectors that have been resilient or benefitted from the pandemic, such as technology or healthcare, may continue to see strong demand. The banking industry is also expected to see significant consolidation, while the technology, media and telecom (TMT) sector has never been hotter.
