M&A activity plummeted this quarter with global M&A volume falling 42% from Q2 to the lowest Q3 figure in a decade. U.S. M&A activity, which historically accounts for about half of worldwide activity, fell by approximately 40% as well. Matterhorn’s M&A database tracks publicly-announced deals over $25 million in value, harnessing both AI and attorneys to digest the granular deal points of each transaction to allow for comparisons across industries, specific deal terms, and both legal and financial advisors.
The M&A market faces obstacles on multiple fronts as companies navigate both a weakening worldwide economy alongside geopolitical tensions. As Frank Aquila of Sullivan & Cromwell, framed it, “As the global economy has been hit by serious headwinds, M&A activity has been a prime casualty. Interest in consolidation continues in many sectors so we are busy, but getting deals across the finish line at the moment is truly challenging.” Further, regulatory hurdles at home have dampened the appetite for acquisitions as Biden Administration’s more aggressive anti-trust policies threaten some high-profile deals.
Wachtell returned to the top spot on this quarter’s league table – propelled by Adobe’s $20 billion purchase of Figma. While the announcement met with some criticism, the Adobe-Figma merger handedly beat out the rest for the largest transaction in Q3 and catapulted Figma’s counsel, Fenwick & West LLP, into the top 5 to land the #3 spot with that single deal.
Kirkland & Ellis is in the top 5 yet again this quarter, edging out Fenwick for the #2 spot with its 5 deals closed. Cravath landed the 4th spot, driven largely by Pfizer’s acquisition of Global Blood Therapeutics, Inc. Skadden rounded out the top 5 with its 4 deals closed this quarter.
Deals in the healthcare industry led the way this quarter, just as they did in Q2. The main change from Q2’s industry mix is that technology, media, and telecom dropped from its former position to tie with the financial institution space.
Traditionally, Q4 a busier time of year for M&A than the summer months of Q3. The strong US dollar has made foreign companies particularly attractive targets for U.S.-based acquirers so the end of 2022 may bring more robust M&A activity as U.S. companies go on a buying spree. Some analysts predict Q4 2022 will beat this quarter by double digits.