With some rare exceptions—namely in the oil & gas and energy sectors—deal activity was down in 2022 as a sense of fatigue set in following a prolonged period of high deal activity and as inflation and rising interest rate concerns took center stage
The top-five sector rankings were largely unchanged for 2022. The technology sector once again led deal activity, with 2,589 transactions worth US$612.6 billion. This represents an 11 percent and 40 percent year-on-year decline, respectively.
The second leading sector was pharma, medical and biotech (PMB). A total of US$254.7 billion worth of M&A transactions were announced—a 20 percent drop compared with 2021. Volume in the sector was down by only 2 percent year-on-year, with a total of 1,187 deals.
View full image: US M&A sectors by volume 2022
The steepest fall among the top-three sectors was seen in industrials and chemicals (I&C), which came in third behind technology and PMB. I&C was responsible for US$146.3 billion in aggregate deal value with a total of 1,060 deals, resulting in a 50 percent decline in deal value and 20 percent decline in deal volume compared to 2021 figures.
Although industrial and manufacturing output, in particular, is tied to consumer demand, which remained remarkably robust through 2022, dealmakers pulled back as a weaker economic outlook came into view. Companies in the I&C sector typically have high fixed costs because they require expensive equipment, facilities and maintenance to produce products and components, which can leave them exposed to rising costs and falling demand.
Looking further down the list, the real estate sector stands out for its comparatively robust year. Consistent with past trends, it saw relatively low deal volume compared to other sectors, with 91 deals recorded, up 3 percent year-on-year. However, in terms of value, the sector jumped from eighth position in 2021 to fifth place in 2022 despite a year-on-year decline in deal value of 17 percent, with US$100.9 billion in deals.
View full image: US M&A sectors by value 2022
It is also worth noting that the sectors that have seen the largest uptick in M&A volume year-on-year are oil & gas (up 19 percent), energy (up 21 percent during the same period) and mining (up 15 percent). In all three cases, their 2022 activity is connected to the price of crude oil (which, while it has declined considerably since peaking mid-year, remains well above the average seen in the past eight years) as well as the ongoing energy transition, both of which have driven deals. The resilience of oil & gas and energy sector volume seen in 2022 is likely to have staying power. Producers in the sector are equipped with cash and highly motivated to repurpose their portfolios amid the ongoing energy transition.
[View source.]
