The third quarter of 2023 saw a slight fall in deal activity after the recovery in the global M&A market in the second quarter.

Total deals in Q3 totalled $473bn, a drop of 17% compared to the previous quarter. In terms of deal volume, there was a 16% fall from 8,394 deals in Q2 2023 to 7,083 M&A deals in Q3 2023.

Deal activity was impacted by several factors including higher inflation and rising interest rates, which in turn raised concerns over an economic slowdown in many of the world’s leading economies.

Key M&A takeaways

Below are the key trends that were observed in Q3 2023:

  • Billion-dollar deals shrunk –Q3 2023 saw a fall in the number of mega deals, deals where the transaction value is greater than or equal to $1bn. In Q3 2023, there were 98 mega deals, which was a decline of 15% compared to Q3 2022
  • The technology, media & telecoms (TMT) sector dominated M&A deal activity by value – The TMT sector had the highest M&A deal value in Q3 2023 with 2,049 deals worth $129bn. The TMT sector also accounted for two out of the top 10 global M&A deals in Q3 2023, driven by key themes including big data and cloud. The TMT sector was followed by energy (including oil & gas and power) and consumer (including consumer goods, retail and wholesale, foodservice, apparel, sport, travel & tourism, and packaging) with 806 deals with a deal value of $118bn and 1,148 deals with a deal value of $89bn, respectively.
  • North America recorded the highest M&A deal activity – North America continued to dominate M&A deal activity with 2,842 deals worth $242bn in Q3 2023. Meanwhile, all regions saw a drop in deal value in Q3 2023 compared to the previous quarter, except for the China region.

Notable deals in Q3 2023

Q3 saw some interesting deals, such as Cisco’s $30bn acquisition of Splunk, a security analytics and observability company that will strengthen its cybersecurity offering. Another saw Liaoning Asset Management acquire a portfolio of assets from Shengjing Bank, a commercial banking and related financial services provider, for $24bn.

Other prominent deals included Westrock’s merger with Smurfit Kappa, a provider of paper packaging solutions for a deal value of $19bn, and GTCR’s $10bn acquisition of a 55% stake in Worldpay, an online multi-currency payment system.

Most of these deals were driven by environmental, social, and governance (ESG) and the emerging economies themes. Other noteworthy themes included AI, supply chain disruption, and big data. The outlook for M&A Q4 2023 remains relatively subdued, with the risk of further increases in interest rates and the prospect of mild recessions in several key markets.

As businesses navigate the rapidly changing global landscape, integrating ESG principles into M&A strategies has become a necessity for long-term success. However, the M&A market will rebound as we head into 2024 as acquisitions remain a key element of corporate strategy.