According to data from Refinitiv The first quarter of 2023 was the slowest start to the year in the M&A market since 2013, in part because rising interest rates ended the era of cheap credit. All this was only compounded by concerns about bank failures in March.
The value of mergers and acquisitions between January and March fell 45 percent to $550.5 billion compared to the same period last year, the largest decline in the first quarter since 2001. According to the newspaper, the consultants are afraid that the increased volatility of the markets, concerns about the banking market, and this year’s recession risks in connection with the American economy will all further reduce the possibility of a recovery in activity.
According to data from Refinitiv Europe was the main laggard in the last quarter, regional transaction activity fell by 63 percent to $81.6 billionwhile in the United States it fell by 47 percent to $271.7 billion, and in the Asia-Pacific region by 24 percent to $134.6 billion.
There were segments where M&A activity remained strong, such as healthcare, technology and industry. Healthcare transactions accounted for nearly a fifth of deals and hit a two-year high during the period, boosted by the quarter’s biggest transaction, Pfizer’s $43 billion acquisition of oncology-focused biotech Seagen.
The main obstacle to deals remains falling company valuationscompanies are still reluctant to negotiate deals that would highlight the reality of lower prices.
Rising interest rates have also hurt buyers’ ability to finance larger acquisitions. The paper says that private lending groups and private equity funds continue to play a prominent role in financing transactions, including companies such as Apollo, Ares and Blackstone.
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