2022 M&A Review and Outlook

2022 M&A Review and Outlook

Blog Material: WilmerHale M&A

Today we launch Material: The WilmerHale M&A Blog. WilmerHale’s mergers and acquisitions and private equity teams have decades of experience advising public and private companies, financial sponsors and other M&A participants in all aspects of M&A and private equity transactions around the globe. Applying a holistic approach, we routinely combine our transactional and regulatory know-how to advise leaders in the life sciences, technology, defense, communications, financial services and other industries on bet-the-company transactions. Drawing on the breadth and depth of our M&A practice, Material will provide updates and analyses of key trends and developments impacting the M&A and private equity worlds.

Our first post is our 2022 M&A Review and Outlook, sourced from our annual M&A Report. We hope you enjoy and encourage you to subscribe. —Hal Leibowitz & Joe Conahan, WilmerHale M&A Co-Chairs

2022 M&A Review and Outlook

Slowing economic growth, equity market volatility, stubborn inflation, rising interest rates and geopolitical tensions combined to create a hostile environment for M&A activity in 2022, with deal volumes down across the board and average deal prices declining in all sectors except energy. While deal activity in 2022 was unlikely to match the lofty levels of 2021, the market was more sluggish than anticipated, producing its fourth-lowest deal volume since 2010.

The number of reported M&A transactions worldwide decreased by 14%, from 57,114 deals in 2021 to 49,058 in 2022. Global reported M&A deal value contracted 32%, from a record annual high of $4.62 trillion to $3.15 trillion. The average deal size in 2022 was $64.1 million, down 21% from the $80.9 million average in 2021.

Geographic Results

Deal volume and value was down across all major geographic regions in 2022.

  • United States: Deal volume slumped by 16%, from 24,899 transactions in 2021 to 20,921 in 2022. US deal value shrank by 41%, from $3.05 trillion to $1.81 trillion. Average deal size decreased by 29%, from $122.4 million to $86.4 million. The number of billion dollar transactions involving US companies fell by 52%, from 594 in 2021 to 288 in 2022, while their total value decreased by 43%, from $2.26 trillion to $1.29 trillion.
  • Europe: The number of transactions in Europe declined by 12%, from 21,282 in 2021 to 18,808 in 2022. Total deal value dropped by 43%, from $1.66 trillion to $949.9 billion. Average deal size decreased by 35%, from $77.8 million to $50.5 million. The number of billion-dollar transactions involving European companies slid by almost half, from 340 in 2021 to 171 in 2022, while their total value declined by 49%, from $1.16 trillion to $594.9 billion.
  • Asia-Pacific: In the Asia Pacific region, deal volume slid by 13%, from 12,436 transactions in 2021 to 10,779 in 2022. Total deal value in the region decreased by 11%, from $1.10 trillion to $972.7 billion, resulting in an average deal size that edged up 2%, from $88.1 million to $90.2 million. The number of billion-dollar transactions involving Asia Pacific companies declined by 21%, from 182 in 2021 to 144 in 2022, while their total value dipped by 4%, from $648.1 billion to $624.1 billion.

Sector Results

M&A transaction volume and value decreased across all primary industry sectors in 2022.

  • Technology: Global transaction volume in the technology sector decreased by 13%, from 10,445 deals in 2021 to 9,058 deals in 2022. Global deal value fell by 16%, from $709.5 billion to $595.3 billion. Average deal size edged down 3%, from $67.9 million to $65.7 million. US technology deal volume decreased by 19%, from 4,784 to 3,862 transactions, while total US technology deal value declined 16%, from $559.9 billion to $471.8 billion, resulting in a 4% increase in average deal size, from $117.0 million to $122.2 million.
  • Life Sciences: Global transaction volume in the life sciences sector decreased by 25%, from 1,879 deals in 2021 to 1,418 deals in 2022, while global deal value dropped 34%, from $267.4 billion to $176 3 billion. Average deal size decreased by 13%, from $142.3 million to $124.3 million. In the United States, deal volume declined by 28%, from 965 to 691 transactions, while deal value fell by 31%, from $222.1 billion to $153.9 billion, resulting in a 3% decrease in average deal size, from $230.2 million to $222.7 million.
  • Financial Services: Global M&A activity in the financial services sector decreased by 15%, from 3,115 deals in 2021 to 2,643 deals in 2022. Global deal value was down 21%, from $413.1 billion to $326.9 billion, resulting in a 7% decrease in average deal size, from $132.6 million to $123.7 million. In the United States, financial services sector deal volume contracted by 20%, from 1,677 to 1,349 transactions, while total deal value dropped 60%, from $243.8 billion to $98.0 billion. Average US deal size fell by half, from $145.4 million to $72.7 million.
  • Telecommunications: Global transaction volume in the telecommunications sector fell by 20%, from 815 deals in 2021 to 653 deals in 2022. Deal value dropped 68%, from $263.9 billion to $84.4 billion, resulting in a 60% decrease in average deal size, from $323.8 million to $129.2 million. US telecommunications deal volume decreased 14%, from 229 to 197 transactions, while deal value plunged from $179.8 billion to $29.2 billion. The average US telecommunications deal size plummeted by 81%, from $785.2 million to $148.1 million.


Given the headwinds of 2022, the year’s M&A deal volume is a testament to dealmakers’ ability to see the potential to create value even in unfavorable conditions. The quarterly deal counts, however, suggest that deal activity is trending down. The fourth quarter of 2022 saw 11,747 deals, compared to 13,574 in the first quarter and 15,151 in the fourth quarter of 2021.

Important factors that will affect M&A activity over the coming year include the following:

  • Macroeconomic Conditions: Global GDP growth slowed from 6.0% in 2021—the strongest growth rate in almost fifty years—to 3.4% in 2022 and is expected to slow further in 2023. US GDP growth is expected to see a more pronounced slowdown in 2023, following growth of 5.9% in 2021 and 2.1% in 2022. Inflation remains stubbornly high, with energy and food prices under particular inflationary pressure, and China’s recent pivot away from its zero Covid policy has the potential to cause further disruption to supply chains. US monetary policymakers face a difficult balancing act as interest rate increases intended to tamp down inflation risk pushing the economy into recession and straining banks. The stunning collapse of Silicon Valley Bank in early March raises the specter of tighter credit conditions dampening debt-financed acquisition activity, among other potential implications.
  • Valuations: Rising interest rates have pressured company valuations that were boosted by the immense infusion of liquidity into the financial system during the COVID-19 pandemic. The retrenchment in valuations for publicly traded companies has in turn suppressed private-company valuations—many of which were detached from fundamentals. VC-backed companies that are seeking exits in the coming year are likely to encounter an M&A market that is less hospitable than in 2022, or to face the prospect of down rounds if new capital is needed. From an acquirer’s perspective, depressed valuations create attractive buying opportunities. The net effect of these competing tensions on M&A deal flow in 2023 could be positive or negative.
  • Private Equity Activity: On the buy side, private equity firms, which were buoyed by the $727.6 billion in global fundraising in 2022—down 12% from 2021 but still the third-highest annual figure in history—continue to hold record levels of “dry powder.” On the sell side, PE firms face pressure to exit investments and return capital to investors, even if returns are dampened by increased levels of equity investment in acquisitions and higher deal financing costs due to interest rate increases.
  • Strategic Buyers: Challenging macroeconomic fundamentals and global recessionary concerns are likely to make business leaders more cautious. However, strategic acquisitions remain a compelling way to transform businesses and fuel growth and are likely to continue to play an important role in the M&A market in the coming year.
  • VC-Backed Exits: The number of reported US acquisitions of VC-backed companies decreased by 26%, from 1,594 in 2021 to 1,174 in 2022, while reported proceeds declined 44%, from $112.51 billion to $63.15 billion. VC-backed companies and their investors often prefer the relative ease and certainty of a company acquisition to the lengthier and more uncertain IPO process. In the coming year, the volume of VC-backed company sales will depend in part on whether founders and investors perceive their lower valuations as transitory, and on factors such as market receptivity to VC-backed IPOs and the availability of capital for those companies that seek to stay private.
  • SPAC Mergers: Regulatory uncertainty and poor returns for SPACs that have completed business combinations weighed heavily on the SPAC market in 2022. There were 100 mergers involving SPACs in 2022, compared to 199 in 2021. Despite the precipitous decline in SPAC IPOs in 2022, there were 386 SPACs searching for business combination targets at the end of 2022, compared to 574 at the end of 2021. Many SPACs that completed IPOs at the apex of the market now face deadlines to complete a business combination or return funds to investors. Whether this results in a flurry of announced deals or SPAC liquidations remains to be seen.

This article was sourced from our 2023 M&A Report. Read the full report, and stay on top of all of our M&A updates by subscribing to the Material: WilmerHale M&A Blog.


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