Dealmakers Find It Slow Going in $1 Trillion Game of Catch-Up

Dealmakers are sweating the small stuff again as they fight to claw back lost ground in mergers and acquisitions.

(Bloomberg) — Dealmakers are sweating the small stuff again as they fight to claw back lost ground in mergers and acquisitions.

The value of global deals stands at $1.9 trillion for the year through Sept. 28, according to data compiled by Bloomberg. That’s down $1 trillion — or about a third — on 2022 levels, and includes the smallest haul for a third quarter in more than a decade, the data show.

Bankers say they’re having to work harder on the details of the transactions that are getting over the line, with boards, investors and lenders keen to avoid joining a list of stalled deals that already stretches into the tens of billions of dollars. 

“It is still a different market to 2021 and it requires a lot more effort to get deals done,” said Anna Skoglund, head of the financial and strategic investors group in Europe, the Middle East and Africa at Goldman Sachs Group Inc. “Now, sale processes are more bespoke and carefully designed to maximize certainty of outcome.”

While it’s been a slog, there are signs that M&A activity is picking up. Financing markets are beginning to open up for large deals, while buyers and sellers are getting more realistic on pricing. September has already brought three of the year’s 10 biggest transactions, meaning the drop in volumes versus a year earlier is narrowing — albeit slowly.

Since bankers returned from their vacations, there have been two $10 billion-plus transactions agreed in the US: Cisco Systems Inc.’s roughly $28 billion purchase of software company Splunk Inc. and the huge packaging tie-up between Smurfit Kappa Group Plc and WestRock Co. 

“We are seeing the bid-ask spread between buyers and sellers narrow, which is more conducive to dealmaking,” said Nestor Paz-Galindo, global co-head of M&A at UBS Group AG. “You have to take a filtered approach to processes, make sure you deal with bidders that are credible, serious and can actually take the deal to finish line.”

Other notable multibillion-dollar deals announced in the third quarter included Danaher Corp. swooping on UK medtech company Abcam Plc, Roark Capital Group winning the race to acquire US sandwich chain Subway and GTCR LLC taking majority stake in card payments processor Worldpay Inc.

Financing Fillip

The jumbo debt package that backed the Worldpay buyout, in particular, has given confidence that investor appetite for broadly-syndicated financings is returning; Worldpay boosted the size of the debt offering and tightened pricing twice on the loans.

A slate of private credit providers have emerged to help finance deals during the downturn, but the return by banks to lending on large transactions is seen as key to any sustained revival in global M&A. Lenders are putting in the hours to avoid any nasty surprises when trying to sell on debt tied to big-ticket deals. 

“Pre-marketing has become a more standard operating procedure for anything big or with more of a story to it,” Christina Minnis, head of global credit finance and global acquisition finance at Goldman Sachs, said in an interview at the bank’s recent EMEA Credit and Leveraged Finance Conference in London. “We want issuers to have confidence before we put a deal on the screens to limit clients to market volatility.”

IPOs Return 

The sentiment chimes with that of bankers working in the equity capital markets, where initial public offerings are starting to return after a prolonged period in the dust. Kristin Roth DeClark, global head of technology investment banking at Barclays Plc, told Bloomberg Television earlier this month that it’s fun to be an investment banker again because deals really need to be sold to investors. 

Roth DeClark was speaking after the IPO of SoftBank Group Corp.’s chip designer Arm Holdings Plc in New York, which Barclays had a leading role on. The Arm IPO spurred a flurry of other US listings and would-be issuers are now waiting to see how markets digest these before deciding whether to join them.

Rejuvenated IPO markets would also give private equity firms another way to the exit investments they’ve been reluctant to sell while valuations have been subdued. 

“There was close to a 50% drop in sell-side processes this year for sponsors, creating a significant backlog,” said Paz-Galindo at UBS. “They haven’t been returning capital to investors, so they’ll have to return to market.”

More stories like this are available on

©2023 Bloomberg L.P.