After the disappointing end to 2022, many predicted that the slowness in deal activity in M&A markets would carry over to 2023. It was hard to imagine M&A deal volumes dropping lower than those at the end of 2022, but that is exactly what happened. Companies are still contending with economic uncertainties, coupled with the aftermath of a mini banking crisis and macroeconomic headwinds.
M&A activity in APAC remained low in Q1 2023 as deal volumes declined by 14% Y-o-Y (aggregated US$180bn) and number of deals from APAC contributed for just 30% of total global M&A (lowest compared to Americas and EMEA). Significant decline in deal volumes in Southeast Asia (down 70% Y-o-Y) weighed on the overall growth, however improved deal volumes in Japan (up 78% Y-o-Y) emerged as the bright spot.
Sentiment for the early part of 2023, remains somewhat bleak and we are moving into 2023 on a downward trajectory. The underlying drivers for that – economic uncertainty, challenging financial conditions and a bit of a loss of confidence – will not turn 180 degrees immediately. All this is suggestive of the fact that we shall expect a more normalised level of M&A activity in 2023, one that will likely resemble pre-2021 levels.