M&A activity slumped further in the third quarter of 2022 as business leaders put corporate checkbooks away amid rising interest rates and a slowing economy.
Fewer than 4,700 deals were announced in the U.S. and Canada between July and September, according to data from S&P Global Market Intelligence, the lowest number since the second quarter of 2020 when COVID-19 sparked a collapse in activity.
The total transaction value of $255.48 billion was down 58.4% year over year and 44.6% lower than in the second quarter of 2022.
Strong start fades away
The year started strongly, with Microsoft Corp. buying video game
Diminishing cash positions reduces the potential for deals while high borrowing costs have disincentivized debt-funded M&A.
Meanwhile, special purpose acquisition companies that proliferated in 2021 have largely vanished. The shell companies that would take private companies public without a traditional initial public offering kicked up a storm as cheap money sloshed around the financial system. With that cheap money no longer there, the SPAC industry has ground to a halt.
Just two sectors bucked the broader quarterly decline in the value of deals. Energy and utilities deals totaled $41.29 billion between July and September, the highest quarterly total for the sector so far this year. Healthcare dealmaking worth $40.15 billion in the third quarter was in line with volumes in the first half of the year.
Adobe Inc.'s $19.41 billion deal for Figma Inc., announced in September, was the largest in the third quarter — and fifth largest in 2022 so far — ahead of Oak Street Real Estate Capital LLC and GIC Pte. Ltd.'s $13.85 billion agreement to buy STORE Capital Corp., a specialist in single-tenant operational real estate.