Skip to content

Volatility buffets global deal making in Q1

Lucille Jones
Lucille Jones
Deals Intelligence Analyst

With volatility rising and risk-appetite souring during 2022, hopes of a meaningful new year rebound were scotched for most risk assets. CEOs hit the brakes on corporate acquisition activity, and equity investors favoured the familiar. In contrast, the debt markets shrugged off their 2022 malaise.

  1. In Europe, M&A losses were significant rewinding to levels last seen in 1995.
  2. The U.S. markets, meanwhile, saw IPOs plummet. In EMEA, equity follow-ons rebounded.
  3. A recovery in the debt recovers was driven by North American high yield.

For more data-driven insights in your Inbox, subscribe to the Refinitiv Perspectives weekly newsletter.

In times of general uncertainty, it is the market closest to personal reputations and career risk – namely M&A – that can be most revealing. And in the first quarter of 2023, fear decisively trumped hope in the worldwide market for corporate acquisitions.

Back in late 2021, it was starting to look the world-wide M&A market had a new low-water mark of a-trillion-dollars-per-quarter. But no. The first three months of 2023 saw just $580bn, a fall of 44% on the same period last year, to become the slowest opening period since 2013 and the largest year-on-year decline since 2001.

Deals larger than $10bn have seen the steepest decline, of 50%, as even opportunistic buyers shied away from market volatility.

U.S. M&A has been on a steady decline over the past 12 months, down 47% year-on-year and 13% compared to Q4, to raise $273bn. Of greater concern is the 60% decline in European M&A, which touched $90bn, a level not seen since 1995, before the advent of the euro.

Deals Intelligence: Analyse market trends and assess the changing competitive landscape with league tables and reports powered by our leading-edge products for the deal making community

M&A bright spots

Experience a powerful, smart, and customer-centric solution designed to always inform the investment banking community. Find out more about Refinitiv Workspace here.

Almost no country or region avoids red on the Q1 chart, save Japan and Australia, the latter bolstered by Newmont Corp’s acquisition of gold miner Newcrest in February.

Another outlier was the healthcare sector, with deals up 60% on the year, boosted by Pfizer putting to work its profits from its COVID-19 vaccine in its huge $42bn acquisition of oncology biotech business, Seagen.

Meanwhile, the tech sector’s much-reported doldrums started to show through in the global M&A figures, with the worldwide aggregate deal value down 64% to the end of March, at $92bn.

Global investment banking fees from completed M&A transactions are down 37% on the year to $6.9bn, marking the fifth consecutive quarterly decline in income.

In the league tables, Goldman Sachs retains its world-wide M&A top spot, with JP Morgan leading in Europe and Asia-Pacific. Meanwhile, Centerview joined the global top ten advisers for the first time, leading eight other independent advisory firms in the worldwide top 25.

Equity markets polarised

The market for equity raising polarised in Q1, with more established names able to raise capital as the market shied away from newer entrants to equity capital markets.

The amount raised in stock market flotations was down 41% on the same period last year, to raise just $24bn globally – the slowest year-opener since 2019. Just $2bn was raised from IPOs on U.S. exchanges in Q1.

If you are a Refinitiv Workspace user, access our Deals Intelligence Insights here.

In contrast, overall equity market activity was up 8% globally, to reach $132bn, driven by the strongest opening period for follow-on offerings since 2021. Secondary offerings raised $85.5bn globally, 37% up on the same period last year.

There was also regional disparity in equity market appetite.

Companies in Europe raised 55% more than in the first quarter of 2022, while Asia-Pacific issuance was down some 15%. In Europe, Germany led the with an aggregate value of $6bn, while the UK was an outlier in number terms, clocking more than 40 equity transactions in the first three months of the year.

In terms of global equity deal maker rankings, Goldman Sachs reclaimed the top spot for the first time since 2019, followed by Morgan Stanley and CITIC.

If you are a Workspace user you can explore these global trends with the DealIntel app or click here to be redirected.

Debt markets flight-to-risk

In terms of opening-quarters, Q1 was a four-year low for global debt capital issuance. But in the context of 2022’s deteriorating market, the news was happier, with debt issuance jumping 48% from the final few months of 2022. Investment grade debt was up 39% in the previous quarter.

However, the big gainer was global high yield, which raised $51.2bn, nearly tripling the dismal fourth quarter of 2022. High-yield offerings from the U.S., Canada and France accounted for 76% of the market, up from 66% a year ago.

Thanks to the sustainable finance market, Q1 even saw some record-breaking activity, with green bond issuance jumping by a quarter compared to the same period last year, to raise $134bn – the highest total since records began in 2015. It also marked an even more impressive 78% increase in the final quarter of 2022.

By industry sector, the debt capital markets pivoted towards more defensive sectors, with consumer staples, technology, and energy & power issuers enjoying double-digit percentage increases in the same period last year, while issuers in the telecoms and retail sectors saw the biggest declines.

Also, in line with a shift towards risk-off sentiment, international bond offerings were down by a tenth, while emerging markets bonds fell by 20%.

In the league tables, JP Morgan continued its five-year unbroken streak as the lead book-runner by proceeds, followed by Citi and BoA Securities.

Analyse market trends and assess the changing competitive landscape with our Deals Intelligence offering, featuring league tables and reports powered by our leading-edge products for the deal making community.


What did volatility reveal in the market?

In times of general uncertainty, it is the market closest to personal reputations and career risk – namely M&A – that can be most revealing.