According to GlobalData, the global M&A market in Q1 2023 witnessed deals worth $413bn, a drop of 44% compared to the $744bn deal value in Q1 2022.

In terms of deal volume, there was a 23% fall from 10,003 deals in Q1 2022 to 7,738 M&A deals in Q1 2023.

Deal activity was impacted by several factors including higher inflation and rising interest rates, which in turn raised concerns over an economic slowdown.

Key M&A takeaways

Below are the key trends that were observed in Q1 2023.

• Billion-dollar deals saw a severe fall – Q1 2023 saw a fall in the number of mega deals, deals where the transaction value is greater than or equal to $1bn. In Q1 2023, there were 79 mega deals, which was a decline of 45% compared to Q1 2022.

• TMT continued to dominate M&A deal activity – The technology, media, and telecom (TMT) sector continued to dominate, with 2,266 deals worth $107bn recorded in Q1 2023, while most other sectors saw a decline in deal activity in the quarter. The TMT sector also accounted for six out of the top 20 global M&A deals in Q1 2023, driven by several key themes including the future of work, AI, and ESG-Environment. TMT was followed by the banking & payments and power sectors, with 754 deals with a deal value of $65bn and 655 deals with a deal value of $64bn, respectively.

• North America recorded the highest M&A deal activity – North America continued to dominate M&A deal activity with 3,209 deals worth $208bn recorded in Q1. All regions saw a drop in deal value in Q1 2023 compared to the previous quarter.

Notable deals in Q1 2023

Despite the overall decline in deal activity, Q1 2023 saw some interesting deals such as Pfizer’s $43bn acquisition of Seagen, a biotechnology company focused on developing and commercializing innovative monoclonal antibody-based therapies for the treatment of cancer, and TBJH’s acquisition of Toshiba, which manufactures and markets advanced electronic and electrical products for $15.1bn.

Other prominent deals included CVS Healthcare acquiring Oak Street Health, a primary care centre for adults on Medicare in medically underserved communities where there is little to no quality healthcare for a deal value of $10.6bn and Apollo Global’s $8.1bn acquisition of Univar Solutions, a global chemical and ingredients distributor and provider of value-added services that work with leading suppliers worldwide.

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Most of these deals were driven by rare diseases and innovation themes. Other noteworthy themes included energy transition, ESG-Environment, batteries, supply chain, and orphan designated drugs. The outlook for M&A over the rest of 2023 remains relatively subdued, with likely further increases in interest rates and the prospects of mild recessions in several key markets. However, the M&A market will likely rebound as we head into 2024 as acquisitions remain a key element of corporate strategy.