Tech M&A is still setting records in 2022, largely due to a spate of megadeals, raising questions about whether the buying spree can continue as interest rates climb and markets turn sharply bearish.

The pace of deal-making in 2022 is on track to match or exceed 2021's record pace. For the year through May, 2,272 industry transactions were signed, totaling $386.95 billion. By comparison, 4,321 deals were signed during full year 2021 for an aggregate value of $790.94 billion, according to 451 Research.

Industry megadeals have propped up industry transaction values through the year. Between January and May, acquirers announced eight technology and telecommunications transactions that crested the $10 billion mark. The prior year saw 12 11-figure transactions over the year.

The megadeals in 2022 are coming in higher than those announced in 2021, suggesting the record months of 2022 are more dependent on one-off massive deal values. They include record-breaking purchases like Microsoft Corp.'s $74 billion catapult into gaming development with its acquisition of Activision Blizzard Inc., Broadcom Inc.'s aggressive expansion of enterprise software with its $61 billion bid for VMware Inc. and Elon Musk's eccentric $44 billion play for social media platform Twitter Inc.

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Even without the year's biggest deals, volumes have remained elevated in a market that seems to be coalescing at the two extremes of deal sizes.

March and January 2022 were the top two most-active months of the past decade for technology and telecommunications M&A volume, respectively, even as March recorded about half the aggregate deal value of January. Those are just two of four months in 2022 that are the top 10 busiest M&A months of the past 10 years.

The 11-figure headlines are obscuring a retreat in deal valuations in 2022. Technology and telecommunications acquirers are paying an average of 3.7x enterprise value-to-trailing revenue through May. That is down from the 4.3x average for full year 2021, but it is still a turn or more above average valuations in any of the 10 years prior to 2021.

Average monthly valuations have seesawed since January's high water mark of 4.7x, and the trend line seems to be emerging in a floorward trajectory. May was a low point of 1.9x.

With the market roughly three-quarters of the way through June, the last month of the second quarter could illustrate just how dependent the industry's robust M&A figures are on splashy megadeals. The month has seen no purchases over $2 billion, and average valuations were trending at just 2.8x as of June 21.

While the month has seen 287 announcements as of June 21, total values reach just $10.82 billion, nowhere near May's total deal values of over $102 billion.

May, which saw the announcement of Broadcom's VMware buy, ranked among the most highly valued M&A months of the past 10 years for the industry.

451 Research is part of S&P Global Market Intelligence.