Terminated M&A deals with private equity or venture capital involvement globally have been on the rise since the second half of last year, S&P Global Market Intelligence data shows.

Private equity or venture capital had a hand in 15% of all terminated M&A deals in the second quarter, the highest rate in at least six quarters.

As recently as the third quarter of 2021, just 6% of terminated M&A deals had private equity or venture capital involvement.

It is still too soon to say that turbulent macroeconomic conditions are making it harder for private equity to close deals, but it is something to keep an eye on, said Cameron Joyce, deputy head of research insights at Preqin, in an interview.

"We've had this dislocation in valuations, and obviously that's going to lead to more GPs pulling out, and you would expect an increase in '22. But we don't see it so far," Joyce said.

"If this is going to play out, it's more likely in VC and private equity because that's where we've seen the largest dislocations — primarily public market valuations and then concerns about what someone's just paid in the private market," Joyce said.

* Read about global private equity and venture capital deals in June. * Download a spreadsheet of data from this story.

Slower deal pace

Preqin is forecasting a "further slowdown in deal activity," as buyers and sellers come to terms with a reset in valuations. Since 2021, the environment for exits has deteriorated, which could encourage private equity general partners to prolong the life of their funds or move portfolio companies into secondary vehicles, Joyce said.

Signs of macroeconomic stress can be seen in deals that avoid termination. One recent example is the proposed acquisition of Zendesk Inc. by an investor group that includes Permira Advisers LLC and Hellman & Friedman LLC in a deal announced in June. The $9.9 billion purchase price shaved 38% off the $16.05 billion take-private bid the software-as-a-service company rejected earlier this year.

Rockier economic conditions could also raise the risk that more private equity portfolio companies will file for bankruptcy. However, Market Intelligence data shows just six bankruptcies this year through July 21 among private equity portfolio companies required to file with the U.S. SEC. That compares to 46 private equity portfolio company bankruptcies in all of 2021 and 134 in 2020.

Large deal terminations

Year to date, among terminated deals where the value of the potential transaction was known, KKR & Co. Inc.'s take-private bid for Telecom Italia SpA was the largest to fall apart, with an estimated transaction value of $40.1 billion. Telecom Italia confirmed talks were off in an April statement, noting that the company's board declined to move forward with the due-diligence phase of the deal.

France-based supermarket operator Carrefour SA was at the center of the second-largest terminated deal with an estimated transaction value of $36.5 billion. Citing food security concerns, the French government blocked the potential sale of Carrefour by Brazilian private equity firm Península Participações SA to Canada's Alimentation Couche-Tard Inc. just days after it was announced in January 2021.

It is hard to find a through-line in the relatively small number of terminated deals recorded so far in 2022, but Joyce said a trend could emerge in the coming months.

"A lot of the completions we saw in Q1, possibly even in Q2, were deals that have been on the table for a while. If they're close to completion by that point, they're going to complete regardless of whether the macro conditions have changed. That's a factor that leads to a lag in the data," Joyce said.