60% of CEOs not planning M&A delays

Global M&A activity will likely rise in the second half of 2023 as investors and executives look to balance short-term risks with their long-term business transformation strategies, according to PwC’s Global M&A Industry Trends Outlook.

While global deal activity remains clouded by macroeconomic volatility, including recession fears, rising interest rates, a steep decline in equity valuations, geopolitical tensions, the war in Ukraine, and supply chain disruptions, three-fifths (60%) of global CEOs say they are nevertheless not planning to delay deals in 2023, according to PwC’s 26th Annual Global CEO Survey.

The global M&A market faced a challenging 2022, with M&A volumes and values declining from record-breaking highs (65,000 deals) in 2021 – respectively by 17% and 37% – although remaining above 2020 and healthy pre-pandemic levels.

In the second half of 2022, deal volumes and values declined by a greater portion – by 25% and 51%, respectively – compared to the year prior.

However, various macroeconomic and geopolitical factors have not impacted M&A markets uniformly.

India, for example, was an outlier in 2022, seeing activity rise by 16% and volume by 35% – to an all-time high – compared to double-digit declines in the US, China, and many other territories.

The outlook finds that M&A – particularly portfolio optimisation – continues to represent a strategic opportunity for market players – irrespective of challenging macroeconomic and geopolitical factors – and remains a tool to help CEOs reposition their businesses, bolster growth and achieve sustained outcomes in the longer term.

Global M&A Outlook

Macroeconomic volatility and geopolitical conflict are not having a uniform impact across industries.

The following industry dynamics will create opportunities for M&A in 2023:

Technology, Media and Telecommunications (TMT): Digitalisation for many businesses remains a key focus. Software deals will continue to dominate the sector – as much as they did in 2022 – have accounted for two-thirds (71%) of tech deal activity and three-quarters (74%) of deal values. Other areas which will likely be hot spots of M&A activity include telecoms, the metaverse and video games.
Industrial Manufacturing and Automotive (IM&A): Portfolio optimisation will drive divestitures and acquisitions, particularly those focused on sustainability and accelerating digital transformation.
Financial Services (FS): Disruption from platforms and FinTech is driving rapid technological changes across FS and will boost M&A as players seek to acquire digital capabilities.
Energy, Utilities and Resources (EU&R): Energy transition will remain a priority for investors and management teams, directing large volumes of capital to M&A and other capital project development.
Consumer markets: While challenges remain on the consumer front in 2023, portfolio reviews and a focus on transformational transactions will create M&A opportunities
Health industries: The need to innovate and transform businesses to achieve growth goals will drive M&A activity in 2023. Biotech, CRO/CDMO, MedTech, consumer-facing healthcare and digital health solutions are expected to attract strong investor interest.