While the world enjoyed impressive growth in the number and value of Merger & Acquisitions (M&A) transactions despite COVID impacts in 2021, the first quarter of 2022 witnessed a declining trend.
In 2021, as the pandemic was shadowing many aspects of the global economy, many businesses took initiatives for mergers and acquisitions, both horizontally (between direct competitors) or vertically (between companies that are in different segments in the value chain). While economies were restrained by the pandemic, many businesses also took the opportunity to reform and enhance their internal strengths to prepare for proliferation as soon as the pandemic becomes a predictable and controllable factor.
In the first quarter of 2022, due to concerns around inflation, signs of economic recession, and political conflicts, we saw the number of M&A deals decreased by about 9.5% to 10,529 completed transactions compared to the same period last year. Most interestingly, although there was only a 9.5% drop in the number of transactions, the total transaction value dropped by 32.7% from USD1,028 billion to USD691.5 billion.
The number of mega M&A deals (USD5 billion+ in transaction value) has plummeted by nearly 43%, equivalent to a decrease of nearly 32% in value. This downward trend occurred on most continents, except Africa where the USD4.2 billion worth of investment has created an exceptional 525.4% growth.
Europe, the second-largest M&A market in Q1/2021, witnessed the sharpest decline (59.8% decrease) among continental markets in total transaction value, while this declining figure was 23.7% and 18% respectively for the US and Canada market, and Asia-Pacific.
For ranking of investment value by industry, Telecommunication Services, and Real Estate have climbed to take the first and second places in 1Q2022 from the top 5 most invested industries in the first quarter of 2021 respectively at USD126.5 billion and USD120.5 billion. Within the same period, the Financials sector fell from the number one position to the third position, dropping nearly 61.8% from USD241.3 billion to USD92.2 billion.
In Vietnam, although 2021 reflected a similar trend as the world with the attraction of USD 8.8 billion in the first 10 months of 2021 into the M&A market, 2022 has shown a different picture. The total M&A transaction value continued to surge in the first quarter of 2022, mostly thanks to the big deal size of real estate M&A transactions. For example, the highlights were the acquisition and restart of construction of the Grand Sentosa project by Novaland, or Vivaland taking over and renaming the Saigon One Tower building to IFC One Tower. Most interestingly, Hanoi recorded the highest total transaction value across the country, thanks to the transfer of the Grade A office building Capital Place from CapitaLand to VivaLand at the value of USD550 million. In addition, both strategic and financial investors have actively invested in healthcare, education, and manufacturing.
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The content presented in this article is the view of Cuong Bui (Associate at ASART) and the figures presented in this article are sourced from S&P Global Capital IQ, the Ministry of Planning and Investment, and the author’s analysis.