PB: M&A finds few lifelines in Q3

PITCHBOOK writes:

Companies and investors certainly shopped till they dropped, and they might not be getting up any time soon. Global merger and acquisition activity that had ratcheted up to record-high deal counts and values at the end of 2021, then dropped in the new year, fell further in Q3, clocking in 29.8% down from the Q4 2021 peak.

Climbing inflation, rising interest rates, tumbling tech and healthcare stocks, and a weaker Euro all worked to drag down M&A deals, according to our Q3 2022 Global M&A Report, sponsored by Liberty GTS and RBC Capital Markets. 

– Public companies’ trading multiples have plummeted from a median multiple of 3.3x revenue in 2021 to 2.3x at the end of Q3, while M&A deal multiples have held firm at 2x during the same span.

– Private equity and corporate buyers alike snapped up business products & services companies at higher rates, as 17 deals of $1 billion or more closed in the sector in Q3.

– The energy sector was another pocket of strength during the quarter with deal value up by nearly two-fold from the prior year, with large deals in renewables as well as traditional oil & gas.

– The COVID-19 pandemic’s lingering effects on the labor force dragged on the healthcare industry’s pace of M&A, which typically fares well in recessionary times. 

To download the full report, please click here.