Bain Global M&A report sees opportunity in 2023 for well-prepared acquirers to make bold moves, based on past economic down cycles; themes to watch include prevalence of small/midsize deals, companies retooling portfolios through divestitures, separations

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January 31, 2023 (press release) –

BOSTONJanuary 31, 2023—Bain & Company’s 5th annual Global Mergers & Acquisitions Report, published today, reveals that corporate executives looking ahead to 2023 remain confident in M&A’s role in value creation. While M&A value dropped dramatically in 2022, a loss of 36% in deal value, Bain’s report confirms that deal activity continues to be a central corporate strategy for growth and profitability.

The report points to a survey of nearly 300 M&A executives, conducted by Bain in October 2022, who shared that they anticipate closing a similar number of deals if not more this year. The surveyed executives express confidence in dealmaking’s ability to create value, reporting that nearly two-thirds of acquisitions completed in the previous three years have met or exceeded expectations.

Bain’s research shows that strategic deal value declined more quickly than strategic deal volume. Median strategic deal multiples fell to a 10-year low of 11.9x in 2022, off an all-time high in 2021. The decline in deal multiples, coupled with a mid-year pause of mega-deals, explains the relatively large drop in deal volume versus activity. The largest drops came among deals for Technology and Healthcare & Life Sciences assets.

Recent history of economic downturns supports confidence in a M&A strategy, as it is an excellent opportunity for buyers to make bold moves. Assets are “cheaper” than they have been in years, and opportunities exist to strengthen core business or create strategic options via scope deals.

Bain analyzed M&A activity of nearly 2,900 companies during the 2008-2009 downturn—and found those who were active in M&A outperformed those that sat on the sideline. This can be measured in the superior shareholder return of M&A active companies.

“After five months of pre-pandemic levels of dealmaking, the market shifted in June 2022 and caused many to pause M&A,” said Les Baird, head of Bain’s Global M&A and Divestitures practice. “Based on what we know from past economic down cycles, we anticipate ample opportunity in 2023 for well-prepared acquirers to make bold, strategic moves. In our experience, we’ve found that in the face of uncertainty, proactive, deeper due diligence can deliver a competitive advantage in the speed and quality of deals done.”

Largely setting the tone of the latter half of 2022 was an interest rate hike by the US Federal Reserve Bank, coupled with macroeconomic conditions slowing down the deal market. As the market reset, Bain observed unanticipated shifts in dealmaking and, at the same time, the continued persistence of longer-term trends.

The report identified five M&A themes to watch for in 2023:

  • cash-rich companies making strategic, bold moves,
  • the continued prevalence of small to midsize deals,
  • a balance of scale and scope deals,
  • further pressure on valuations,
  • companies retooling their portfolios through divestitures and separations.

The report also includes examples of how companies can use M&A to scale innovation, increase speed and quality with more proactive, deeper due diligence, and preserve value in integration by addressing cultural fault lines. It also includes 14 industry-specific perspectives including healthcare, energy, and diversified industrials and four country-specific deep dives.

Why Healthcare and Life Sciences’ Wait-and-See Days Will End

In 2022 the number of strategic healthcare deals declined by more than 30% and the average deal size fell by around 15%. Median strategic deal multiples fell five turns to 15.1x after reaching an all-time high of 20.3x in 2022.  Looking to 2023, fourth quarter megadeals foreshadowed the possibility of a resumption in deal activity. The long-term underlying drivers of M&A in healthcare remain strong. Across all the industry’s sectors, 1 percentage point of growth (either organic or inorganic) has an average of four times as much impact on total shareholder return (TSR) as 1 percentage point of EBITDA margin expansion. Cash balances are high, with the top 25 pharma, medtech, and payer companies all having at least 15% of their last 12 month’s revenues on hand. In 2023, pharma companies could lead a rebound in M&A activity as they look to fill the potential growth gap from the $100 billion in patents set to expire by 2030.

Beating the Odds in Energy Transition Deals

Energy and natural resources (ENR) portfolios are changing at a rapid pace. A survey of M&A practitioners found that 80% of energy industry respondents have evaluated separating or spinning off parts of the business. In the first nine months of 2022, divestitures activity totaled $250 billion. Meanwhile, Bain research reveals that acquisitions to advance energy transition are growing and now represent 27% of all deals in energy and natural resources, up from 21% in 2021. This trend is likely to continue as 72% of industry M&A executives surveyed by Bain indicate that future M&A will focus on new areas of business or building new engines of growth. Energy and natural resources companies have more cash to spend on these investments ($300 billion) than any other industry. Bain notes that these energy transition deals have different risk/return profiles than previous deals and they require fundamentally different approaches to value creation. Companies that achieve the most success will be those that acknowledge how different these scope deals are from the traditional scale deals that proliferated in their industry for decades and adapt their playbooks accordingly.

ESG Plays Drive Breakthrough Capabilities for Diversified Industrials

Amid decline in value and volume in diversified industrials M&A in 2022, Bain observes an increasing number of ESG-driven acquisitions among industrial players looking to accelerate broader environmental and social objectives. While it remains difficult to quantify M&A activity under ESG parameters, Bain estimates that one in 10 deals in diversified industrials now has an ESG component. Bain’s report identifies two main types of industrial ESG related deals. First, industrials are acquiring adjacent businesses to gain quick access to greener and more favorable market segments. Second, companies are looking to acquisitions to help improve their production or manufacturing capabilities in pursuit of their own ESG objectives. These trends are likely to continue in 2023.

When Buying (vs. Building) Is the Right Move for Engine 2 (Business Adjacencies)

During the times of turbulence, business leaders know the importance of developing and accelerating an alternative engine of growth for the future. Rather than building a new business from the ground up, Bain’s new research affirms the case for buying. Looking at hundreds of Engine 2 businesses over the past 25 years, Bain found that two-thirds of the most successful Engine 2 business used M&A as a significant part of their scaling plans. Buying was faster, cheaper and more effective than organically building the necessary capabilities and teams.

“Dealmakers are well versed in the cyclical nature of the M&A market. Amid a slowdown that impacts both the base business of acquirers and targets, we’ve seen time and time again that the companies that don’t pause M&A during downturns, rather take advantage of opportunities to reshape their industries are the ones coming out on top,” said Suzanne Kumar, Bain & Company global practice vice president for M&A and Divestitures.

The report also looks at a regional focus, exploring how sovereign wealth funds are using M&A to transform economies in the Middle East and how deal value rose by 139% in India in 2022. In Japan, fewer companies engaged in large cross-border deals intended to transform their business portfolios and in Brazil businesses are rethinking scenario planning around potential outcomes due to the new government’s policies.

Editor's Note: For more information or interview requests please contact: Dan Pinkney, Bain & Company, tel. +1 646 562 8102, email:

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