The recently published report ‘Mergers and Acquisitions Deals by Top Themes and Industries in Q1 2022’ analyzes all deals that were announced in Q1 2022 globally, covering 18 sectors—including aerospace, defense, & security, apparel, automotive, banking & payments, construction, consumer, foodservice, healthcare, insurance, medical devices, mining, oil & gas, packaging, pharma, power, retail, technology, media & telecoms (TMT), travel & tourism.

Following a blockbuster year for M&A activity in 2021, global M&A value was down by 23% in Q1 2022 with a total transaction value of $725 billion and 9,207 deals. Despite the fall, deal-making activity in Q1 2022 can be viewed as a return to more ‘normal’ levels, as the COVID-driven boost has largely dissipated and the broader economic outlook has become less conducive to deal-making.

M&A activity was down despite several megadeals in the TMT sector

GlobalData’s deals database shows that TMT continued to be the biggest sector in terms of both M&A deal value and volume, with 3,006 deals worth $273 billion recorded in Q1 2022, an 8% drop in deal volume and a 5% drop in deal value compared to Q4 2021. The overall fall in M&A activity came despite several large deals of more than $10 billion, mostly coming from the TMT sector.

The top themes driving key deals in the TMT sector in Q1 2022 were cloud and the metaverse. The biggest deal of the quarter, the $68.7 billion acquisition of Activision Blizzard by Microsoft, reflects the company’s focus on the emerging metaverse theme, setting a precedent in this area. Tech giants will start engaging in large M&A deals to position themselves in the metaverse—which they see as the next big step in digital media and collaboration tools.

M&A activity was mostly around North American target companies

GlobalData’s deals database shows that there were 4,003 deals announced in 2021 involving the acquisition of a North America-based company, with a total deal value of $436 billion. North America saw the largest proportion of deals in terms of both volume and value, while Europe ranked second with $140 billion in transaction value and 2,780 deals, followed by APAC (excluding China) and China itself in fourth place. But compared to Q4 2021, all regions reported a decrease in both deal value and volume in Q1 2022.

Nine of the top ten biggest deals of the quarter happened in the US. The top three were the acquisition of Activision Blizzard by Microsoft for $68.7 billion; Citrix System’s acquisition by Evergreen Coast Capital and Vista Equity Partners Management for $16.5 billion; and Elliott Management, Evergreen Coast Capital, and Brookfield Business entering into an agreement to acquire Nielsen Holdings for $16 billion.

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Q1 2022 saw a negative growth rate for almost all sectors

The market weakened in the first quarter, with Q1 2022 being lower than every quarter in 2021 for each sector. The one exception was the packaging sector, which witnessed growth of 32% from Q1 2021. The remaining sectors—including TMT, apparel, banking & payments, construction, foodservice, and many others—all recorded a drop in terms of M&A deal value. Looking at the current mix of macro-economic conditions, geopolitical uncertainty, supply chain disruptions, and other factors, deal-making in the coming quarters of 2022 will continue to face significant headwinds.