Expectations for Accelerated M&A Activity in H2 2023 Despite Slow Start

The latest data from FactSet indicates that the US Mergers and Acquisitions (M&A) market continues to remain subdued, with a significant drop of 23% in deal activity in February 2023 compared to the previous month. In February, only 1,066 M&A deals were announced, down from 1,385 in January. The trend over the past three months also shows a decrease in M&A activity in 19 out of the 21 sectors monitored by FactSet, compared to the same period last year.

Despite the slow start to the year, there are expectations that M&A activity will pick up in the latter half of 2023. Several factors are anticipated to drive this acceleration, including well-capitalized companies seeking to make strategic acquisitions to bolster their core businesses during an economic slowdown. Additionally, financial sponsors are expected to deploy their capital after holding record amounts of cash, while shareholder activism could increase as companies show uneven performance.

The largest deals announced in February include Newmont Corp's proposal to acquire Newcrest Mining Ltd. for $16.9 billion, Public Storage's bid to acquire Life Storage Inc. for $10.9 billion, and CVS Health Corp's agreement to acquire Oak Street Health for $9.5 billion. These deals show that there is still significant activity in the M&A market, albeit at a slower pace than in previous years. It remains to be seen how the market will evolve in the coming months, but many are hopeful that it will pick up as the year progresses.