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Post-pandemic tailwinds driven by historically low interest rates, moderate inflation and steady economic activity that raised M&A activity upwards to historic heights in 2021 and 2022 are now meeting strong headwinds from high-interest rates, geopolitical uncertainty, and recession concerns. This resulted in an approximate 26% yearly decrease in deal value worldwide in 2023, with the US M&A market witnessing a 24% yearly reduction.

Cross-border deal flow

While still significant (US$707 billion in the first nine months of 2023), US cross-border M&A activity went down 21% as compared with 2022. Elements such as the complicated and sensitive geopolitical environment, sanctions and the foreign investment (CFIUS) scrutiny shaped the cross-border deal landscape of 2023.

US outbound M&A activity showed a volume decline in 2023, with around 3,556 deals and a total Target Net Debt Value of US$253 billion as compared to 4,262 deals and a total Target Net Debt Value of US$314 billion in 2022, but it is still above the pre-Covid levels. The top five most active target nations were the same ones as in 2022 (the UK, Canada, India, Germany and Australia).

On the inbound deal flow, the most active acquirers by volume were Canada (451 deals), the UK (278 deals), Japan (221 deals) and France (119 deals), followed by Australia (86 deals).


The artificial intelligence boom and cybersecurity needs maintained M&A activity in the TMT sector. Although there were fewer and smaller deals, it still represented over 35% of total deals and included transactions such as Cysco’s acquisition of the cybersecurity firm Splunk for US$28 billion in cash.

The healthcare industry, which represented 14% of total deals, was also able to keep up the momentum, with increased appetite for the drug developing and treatment markets that propelled some of the biggest transactions of 2023. Standouts were Pfizer’s US$43 billion all-cash acquisition of the cancer drugmaker Seagen and Johnson & Johnson’s US$40 billion split-off of its consumer-health business Kenvue, which holds the Band-Aid and Tylenol brands.

In the context of deals over US$1 billion, approximately 30% were in the energy sector, followed again by the healthcare industry, representing 15% of deals. Energy transition drove the energy sector, with oil and gas companies participating in deals such as Chevron’s acquisition of Hess for US$53 billion – see our Global M&A report piece "Energy transition – the pendulum swings" for more information.

Although expectations are not skyrocketing, it is sensible to anticipate an uptick in the US M&A deal activity, eventually to pre-pandemic levels."

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Legal trends

Increased regulatory scrutiny on merger control and foreign direct investment, together with the recent merger guidelines from the US Department of Justice and the Federal Trade Commission, posed new challenges for M&A activity in the US during 2023. These trends ultimately increased the closing time for bigger transactions and deterred players from entering into large deals (see our Global M&A report on "Merger control, FDI and FSR – the triple impact").

Still, parties have shown themselves to be resilient and creative, using this slowdown to find new ways to unlock value and raise cash, some using their non-core assets and businesses, structuring innovative divestures, carve-outs, spin-offs and other joint venture models and agreeing on big-ticket deals such as Exxon Mobil’s US$60 billion acquisition of the oil producer Pioneer Natural Resources.

Outlook for 2024

Now, after a period of getting used to higher interest rates, combined with cooling inflation and expectations of a steadier rate curve, participants have adapted to the new landscape and understand better the deal costs and so are gaining more confidence in their ability to do deals. Although expectations are not skyrocketing, it is sensible to anticipate an uptick in US M&A deal activity, eventually to pre-pandemic levels. We anticipate that the lack, and higher costs, of funding and the need to acquire technology, to find growth opportunities and for financial sponsors to deploy capital, will shape dealmaking in 2024 with proactive, innovative transaction structures adapted to the new landscape. Surveys show that about 58% of CEOs' plans include divestiture of assets seeking capital.

Still, with a presidential election year ahead, the US could also see a slowdown in dealmaking, since players prefer to pause and have more certainty as to how a new leadership style may change the regulatory conditions applicable to M&A.

All these factors mean that players will have to be proactive, think outside the box and create new opportunities to fulfil their and the market’s needs this year; there are remaining pages of this 2024 chapter still to be written.

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James Robinson

Partner, New York

James Robinson

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New York Americas Mergers and Acquisitions James Robinson