The global merger & acquisition (M&A) deal value plummeted to its lowest point in five years. Totaling $2.2 trillion, these deals marked a 12% decrease from the prior year, attributed to inflation spikes and increasing interest rates worldwide, which induced a slowdown in the global economy, according GlobalData, a leading data and analytics company.

GlobalData’s latest report “Global M&A Deals in 2023 – Top Themes by Sector – Thematic Intelligence,” reveals that the total M&A deal volume fell by 17% from 37,186 in 2022 to 30,883 in 2023.

The market slowdown in 2023 also impacted the number of mega deals worth over $1 billion, which dipped to their lowest since 2019, with just 432 in 2023 compared to 816 in 2021.

Environmental, Social, and Governance (ESG) has emerged as the most prominent theme in terms of deal volume, driving 49 M&A deals out of the top 500 M&A deals, in in terms of deal value.

Priya Toppo, Thematic Intelligence Analyst at GlobalData, comments: “An ongoing trend is the dominance of North America in M&A deal activity. In 2023, it recorded 12,416 deals worth $1.15 trillion, making it the most active region in the global M&A market. Meanwhile, all regions including Europe, APAC-excluding China, South America and Middle East and Africa saw a drop in deal value in 2023 compared to the previous year, except China.”

Despite the overall decline in deal activity, 2023 saw some interesting deals such as ExxonMobil’s $65 billion acquisition of Pioneer Natural Resources, a producer of low-cost and low-carbon-intensity oil and natural gas, and Chevron’s acquisition of Hess, an energy company engaged in the exploration and production of crude oil and natural gas for $60 billion.

Toppo concludes: “Given the slump in global M&A deal activity in 2023, the outlook for M&A 2024 remains subdued. With inflationary pressures easing and interest rates having peaked, GlobalData expects a recovery over the course of the year. Mega deals will continue to face hurdles, especially in the US, where antitrust concerns have been a focus of regulators.

“As businesses navigate the rapidly changing global landscape, integrating ESG principles into M&A strategies has become a necessity for long-term success. However, the M&A market will rebound throughout 2024 as interest rates fall and acquisitions remain a key element of corporate strategy.”