What’s new: Mergers and acquisitions slowed dramatically in China and worldwide in 2022 amid economic headwinds and pandemic disruptions, management consultant Bain & Co. said in a report.
The value of strategic deals completed in China declined 34% in 2022 from the previous year to $304 billion, the lowest in nine years, according to the report. The number of such deals also touched a nine-year low with a 24% decline from 2021, Bain said.
The plunge in deal-making reflected disruptions caused by China’s strict pandemic controls, which blocked business travel, said Zhou Hao, a China M&A analyst at Bain. As China ditched the restrictions, travel and negotiations for potential M&A deals are reviving, Zhou said.
The context: China’s M&A market in 2022 performed in line with the global market trend. The total value of strategic deals worldwide dropped 32% to $2.6 trillion. The broader calculation of global M&A deals, which also includes transactions made primarily for financial returns, venture capital investments and SPAC deals, shrank 36% to $3.8 trillion, Bain said.
Nevertheless, executives remain confident in M&A’s role in value creation in 2023, according to Bain’s survey. Deal activity continues to be a central corporate strategy for growth and profitability, it said.
Assets are cheaper than they have been in years, and opportunities exist to strengthen core businesses or create strategic options, Bain said.
Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
Get our weekly free Must-Read newsletter.
