North American M&A activity remained dismal in 2023 as high interest rates bore down on companies' M&A appetite for a second consecutive year.
The total value of mergers and acquisitions in the US and Canada fell to $1.222 trillion in 2023, a 15.3% drop from a revised $1.442 trillion in 2022. The number of transactions in 2023 also dropped 23.7% to 16,695 from a revised 21,871 in 2022, according to S&P Global Market Intelligence data.
Monthly deal volumes were consistently down from comparable periods in 2022, with December seeing the biggest year-over-year decline of 44.2%. Transaction values, however, showed signs of improvement in the second half of the year. The period saw $666.80 billion of deals, up 20.1% from the first half of the year and 19.2% from the same period in 2022.
Some signs of life
Many of the same factors that depressed M&A activity in 2022 carried over into 2023, including tight monetary policy wiping out cheap financing opportunities for M&A. Still, while they were generally smaller than the largest transactions in 2022, several large-scale deals were announced to close out 2023.
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The oil and gas industry was responsible for several of the year's largest deals amid a slew of megamergers in the fourth quarter of 2023, including Exxon Mobil Corp.'s $65.32 billion deal for Pioneer Natural Resources Co., which is expected to close in the first half of 2024. Chevron Corp.'s $60.42 billion deal for Hess Corp. was also announced in the fourth quarter of 2023.
Earlier in 2023, market conditions conducive to oil and gas deals spurred expectations of a sector-wide increase in M&A for the year.
Pfizer Inc.'s acquisition of biotechnology company Seagen Inc., announced in the first quarter of 2023, was the third-largest transaction of the year with a value of $42.82 billion.
Sector activity
Four of the 10 largest North American deals of 2023 were announced in the fourth quarter of 2023, with an uptick in large-scale M&A activity in December signaling the potential for an uptick in the year ahead.
December was the second-strongest month of the year for transaction values in the materials, financials and healthcare sectors. In terms of the number of deals announced, December was the weakest month across all but the real estate and energy and utilities sectors.
The industrials sector recorded the greatest number of deals in the last three months of 2023 at 660, just ahead of the technology, media and telecommunications sector with 635 deals and the consumer sector with 430.