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Global Dealmaking Activity Plunges To Lowest Level Since Pandemic As SPACs Face Heightened Scrutiny

Courtesy of ZeroHedge

After two years of booming M&A income for Wall Street (which in turn led to record banker bonuses and compensation for two years in a row) an SEC crackdown on the SPAC business, combined with Fed funds liftoff and exogenous disturbances like the war in Ukraine, has prompted dealmaking activity to cool dramatically during Q1.

According to the FT, roughly $1 trillion worth of deals were struck in the first quarter of 2022, roughly 23% lower than the figure from the same period last year.  Refinitiv data shows the decline in M&A activity has spanned all continents.

Source: FT

However, there have been a couple of notable exceptions to this trend. they include:

  • Private Equity: Despite the slowdown, the PE industry enjoyed its strongest-ever start to the year as they deployed massive amounts f cash accumulated during the pandemic. Buyout groups backed $288 billion worth of deals, a 17% rise compared with the first three months of 2021.
  • Microsoft: The software giant's $75 billion purchase of Activision Blizzard is this year’s biggest deal so far, with the €21 billion ($23.2 billion) purchase of Mileaway, Blackstone’s European warehouses, by Prologis, the world’s biggest warehouse owner, coming in second.

Among the PE firms leading the way, Elliott Management has led the year’s two biggest PE industry deals, including taking software company Citrix private alongside Vista Equity Partners for $16.5 billion in January, and buying television ratings group Nielsen for $16 billion in late March with Canadian group Brookfield.

Here's a visualization of PE's ongoing deal splurge (of course, these types of deals are the reason for PE's existence. They raise funds with the sole purpose of doing deals).

Source: FT

The value of cancelled deals picked up in the first quarter of 2021 to $215bn, the highest level since 2018. Nearly three-quarters of all abandoned deals involved a European target, evidence that the conflict in Ukraine and its ramifications has helped to sour buyers' appetite.

Source: FT

One of the biggest declines has been seen in the SPAC space, as regulators have ramped up scrutiny of these deals: The number of SPAC deals has fallen 78% so far this year compared with the first quarter of 2021, while just 38 mergers have been completed.

Source: FT

Today, SPAC deals account for just 3% of total global dealmaking, compared with 17% during the same period in 2021.


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