New Intelligize Report Documents M&A Decline in 2022

Corporate mergers and acquisitions fell off dramatically in 2022, and activity doesn’t appear to be picking up anytime soon.

That’s the key takeaway from The Intelligize M&A Report, a new study published today on dealmaking activity in 2022. Using the Intelligize platform, our team studied companies’ filings with the Securities and Exchange Commission, deal-related SEC comment letters, and related material from different federal regulatory authorities to assess the transaction landscape. We uncovered a sizeable year-over-year decline in M&A deals announced by SEC registrants, coupled with a sharp increase in the number of terminated deals.

To offer a fuller picture of M&A activity in 2022, the report details multiple proposed transactions that collapsed throughout the year. They include what would have been the largest deal on record in the semiconductor chip sector between NVIDIA and Arm Limited, as well as the failed attempt in the defense industry to merge Lockheed Martin and Aerojet.

A survey of comment letters by the SEC to companies involved in proposed M&A deals for the 12 months ended March 31, 2023, offered insight into the SEC’s areas of concern regarding the transactions. They touched on accounting issues, the risks posed to investors in some deals, and foreign involvement prohibited by law in some cases.

“Regulatory concerns sank multiple deals, while additional factors spelling trouble for the M&A space included difficulties in obtaining attractive financing; geopolitical uncertainty, particularly in Ukraine and China; and a negative economic outlook,” said Scott Mirbagheri, an Intelligize analyst and author of the report.

The study also delves into the turbulence in the market for special purpose acquisition companies – more commonly known as SPACs. So-called de-SPAC transactions also fell, mirroring the broader downturn in M&A activity. SPACs had already caught the attention in 2021 of regulatory authorities, whose ongoing interest in the SPAC space seemed to portend the rocky road ahead for 2022.

As described in the report, the liquidation of Pershing Square Tontine Holdings, Ltd., the SPAC led by hedge-fund billionaire Bill Ackman, illustrated the difficulties faced by SPACs trying to find suitable acquisition targets. Such liquidations grew steadily throughout 2022. Meanwhile, SPAC proxy statements seeking approval of extensions to their dates for consummating business combinations skyrocketed.

Overall, the report illustrates the impact that increased regulatory scrutiny, along with broader economic and world factors, had on last year’s downturn in dealmaking. With all these issues persisting into 2023, the chances of a significant M&A rebound this year seem scant.