Our trends to monitor include:

• A strong year ahead for energy and infrastructure
• Further efforts by private equity funds to create value through complexity
• Hotspots of activity in the Middle East, Japan, Southeast Asia and the UK
• Renewed interest in digital assets

We also take a deep dive into some key corporate data points to identify further areas to watch.

Energy and infrastructure M&A will remain strong

Despite a fall in deal-making in the second half of 2022, we expect activity to strengthen in the year to come.

Deal data for H2 shows energy and power as the biggest sector for M&A by value.

The international focus on sustainable, secure energy supplies points to continued investment in renewables, with infrastructure investors set to remain among the most active financial sponsors.

The U.S. Inflation Reduction Act will drive further secondary trades, while financing for energy and infrastructure acquisitions – which have longer hold periods than some other types of assets – is less exposed to current shocks such as the war in Ukraine.

Read our take on energy and infrastructure M&A – including how terms are evolving to manage valuation differentials

European sponsors will seek value through complexity

By contrast, the syndicated market for leveraged loans has largely disappeared, putting a brake on private equity deal-making.

Arrangers are finding it almost impossible to price debt amid the threat of escalation in Ukraine, which in turn is making deals even harder to price.

Looking ahead we expect sponsors to continue creating value through complexity – for example by targeting undermanaged carveouts or aggressively going after two or more complementary assets at the same time.

They will also pursue a wider variety of post-closing ownership models, including investing in assets via joint ventures with strategics.

Read our predictions for sponsor-driven deal-making

Middle East, Southeast Asia, Japan and UK will be hotspots of activity

From a regional perspective we expect the Middle East to remain a nexus of activity alongside India and Southeast Asia.

Japan – one of the few markets to see a rise in M&A in Q4 compared to the previous quarter – is another market to watch with the country’s corporates overcoming their aversion to sales and the yen down against the dollar.

The pound’s continued struggles put UK listed companies in the spotlight. 

Tech M&A in 2023 will focus on digital assets, NFTs and the Metaverse

While tech stocks have fallen from their pandemic-era highs, strategics remain well-capitalised and will be active acquirors in the year to come.

We expect crypto assets to be sought-after despite recent market volatility, with trading platforms set for further deal-making.

Consumer businesses will continue to use M&A to deepen their relationships with customers, following the lead of companies such as Nike whose acquisition of digital asset developer RTKFT has enabled it to package virtual sneakers with the real thing.

Read more on the prospects for tech M&A in 2023 

Data modelling pinpoints the sectors to watch

Finally, our data modelling of the top 100 companies by revenue across 13 sectors reveals those primed for M&A in the year to come.