Worst year for M&A since 2013 as deals fail to reach $3T

investmentnews.com:

Dealmakers are coming to the end of their worst year for mergers and acquisitions in a decade, having seen hopes of any meaningful recovery choked off by reluctant lenders and geopolitical flare-ups. 

The value of M&A and related transactions is down roughly a quarter this year to $2.7 trillion going into the holiday period, data compiled by Bloomberg show. That’s the lowest annual total since 2013, which was also the last time deal values failed to hit $3 trillion in a calendar year, the data show.

The slump leaves investment bankers facing a bleak bonus season and more job cuts if things don’t improve in 2024. And with interest rates and geopolitical tensions still running high, challenges to dealmaking remain, according to Jay Hofmann, co-head of M&A for North America at JPMorgan Chase & Co., who likened current conditions to those experienced during the dot-com crash in 2001. 

“It has just been a lot harder to get things done this year and people have looked for reasons not to do deals. I don’t really see that changing very much right now,” Hofmann said. “People aren’t inclined to look past challenging issues to get deals through.”

A lack of activity by private equity firms has again been one of the major drags on deal-flow in 2023. Buyout firms have spent 36% less on acquisitions this year, compared with 2022, amid struggles in securing debt financing for big deals and price disagreements with sellers — even when offering hefty premiums. 

While some major transactions, including KKR & Co.’s long-trailed acquisition of Telecom Italia SpA for more than $20 billion and GTCR LLC’s purchase of an $11.7 billion majority stake in payments firm Worldpay, have been announced, plenty of others have either stalled or run