Global merger and acquisition (M&A) volumes and values declined last year by 17 percent and 37 percent respectively from records in 2021, but remained above 2020 and pre-COVID-19 pandemic levels, a report released yesterday by PwC Taiwan showed.
The high levels of M&A activity continued in the early part of last year, but lost steam in each successive quarter as headwinds intensified, the report said.
Deal volumes and values tumbled 25 percent and 51 percent respectively in the second half of last year compared with the same period in 2021, it said.
Taiwan was resilient in light of a five-year high of 117 M&A deals, although the number of transactions worth more than US$500 million decreased from 10 to seven, resulting in a 14 percent fall in overall value, PwC Taiwan said.
Deal volumes and values fell 23 percent and 33 percent respectively in the Asia-Pacific region, with the greatest decline in China, where deal volumes and values slumped 46 percent and 35 percent respectively, it said.
M&A activity in China slowed in response to the nation’s pandemic-related challenges and weakening demand for exports, it added.
Companies seeking access to Asian markets are increasingly looking beyond China to India, Japan and Southeast Asian nations for investment opportunities, the report said.
India has emerged as an increasingly attractive destination for investment, overtaking Japan and South Korea in deal values to rank second in the region behind China, it said.
The global consultancy firm expects this year to be an exciting time for M&A activity, with transformation and transactions at the forefront of business leaders’ value-creation strategies, it said.
However, with recessionary fears remaining on dealmakers’ minds, all eyes would be focused on when the US Federal Reserve signals an end to its interest rate hikes, it added.
A halt in monetary tightening would act as a catalyst for greater stability and certainty leading to an upswing in M&A activity, notably among private equity firms, the report said.
As business leaders seek to overcome all kinds of challenges, M&As, particularly portfolio optimization, would be a key tool to help them reposition their businesses, bolster growth and achieve sustainable outcomes over the long term, it said.
M&A activity tends to decelerate in times of uncertainty and market volatility, but murky economic data allow valuations to become more attractive, it added.
Despite recent layoffs in the technology sector, software deals are expected to dominate this year, the report said.
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