Q2 Roundup: M&A Market Taps Brakes

After a relatively strong start to 2022, M&A deal activity decelerated markedly during Q2 as geopolitical and economic turmoil sent companies into more defensive footing. While 83 large deals closed in the United States during Q1 2022, 70 closed in Q2, representing $177 billion in activity which is approximately a 30% drop from Q1. 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 is contending with multiple forces. First, geopolitical uncertainty and supply chain disruptions have led many companies to acquire suppliers and secure their raw materials via joint ventures in more stable regions. Second, market volatility and inflation fears have not necessarily shut down acquisitions, but it has led investors to revisit valuations.  Finally, the Biden Administration’s more aggressive anti-trust policies have dampened the largest deals but smaller acquisitions continue. 

Simpson Thacher tops the league table this quarter, advising on 5 blockbuster deals closed during the quarter. Whether advising the acquirer or target company, Simpson Thacher appeared in the deal documents for 7% of all deals closed – and those were among the largest deals of the quarter, with an aggregate value of $76.5 billion. This volume pushed it past last quarter’s leader, Skadden, which closed 5 large deals this quarter. While Wilson Sonsini had fallen off the league table last quarter, it returned to sit in the number 3 spot. 

These top three firms were propelled by Elon Musk’s takeover of Twitter, with Skadden and Wilson Sonsini representing Twitter while Simpson Thacher represented Musk’s X Holdings I, Inc. 

As is often the case each quarter, Kirkland & Ellis closed a large quantity of deals – 11 deals (15.7% of all deals closed) valued at $32.69 billion. Fried Frank narrowly edged out two other frequent members of the top five – Latham and Wachtell, despite the former closing 5 deals this quarter. 

Healthcare was hot this quarter, with transactions in the industry accounting for 21.43% of all activity, followed by business services deals, which up 18.57% of deals in Q2. Along with industrials, these top three industries accounted for a slim majority of all M&A transactions closed during the period. Technology deals dropped from the top spot in Q1 to fourth this quarter. 


While Q2 2022 represents a deceleration in activity from the robust deal volume of Q1 2022, analysts point to the relative strength of these numbers. As PwC framed it, “Headlines tend to focus on that drop-off, but the bigger picture shows an active market. Just like a car that slows from 100 mph to 60 mph is still moving fast, so was the first half of 2022.”