Looking at data for the 2022 consumer and retail (C&R) merger and acquisition (M&A) market, and the outlook for 2023, it’s expected the sector will continue to build on last year’s trend of a gradual and cautious return to pre-pandemic levels.
2022 was a year of correction as C&R deal volume inched back toward 2018-2019 levels, following a spell of volatility that saw a post-pandemic volume surge in 2021 and earlier lows in 2020 amid the pandemic’s disruptive impact.
The 2022 M&A market recorded 5,274 deals worth US$251 billion, with volume off by just 1 percent from the 2018-19 average posted prior to the pandemic’s sudden emergence, and value off by 5 percent versus 2018-19.
EMEA region remained 2022’s largest deal market by volume (43 percent), followed by ASPAC (34 percent) and the Americas (23 percent). The Americas and EMEA regions both stayed at similar levels in 2022 deal value (with 39 percent and 38 percent, respectively), followed by ASPAC (23 percent).
Note: (a) Deals having deal value US$2bn and above are included; (b) Deal Value includes Net Debt
Source: Refinitiv Deals, accessed on 12 Jan 2023
A 2022 decline versus 2021’s rise in market activity — with volume down 19 percent and value down 23 percent — was primarily due to a COVID resurgence and restrictions imposed in one of the largest Asian markets. Additionally, financial players that were bullish on the sector cut back their investments amid economic uncertainty and rising cost of finance.
While we anticipate caution to prevail among financial investors, we expect strategic corporate buyers to lead the M&A activity in 2023. Strategic portfolio reviews are expected to be a key driver in 2023. Additionally, corporate buyers with strong balance sheets are expected to keep up with their M&A pipeline, while others may look at mergers and joint ventures for consolidation in the search to manage costs.
We also expect premiumization to return to the fore. With investors keeping an eye on climate-friendly options, there is increased market interest in high-growth premium categories such as premium alcoholic drinks and clean cosmetics.
We expect to see heightened deal activity in the ASPAC region as the market opens up and anticipate deals that were pushed in markets during the resurgence of COVID will stage a comeback. At the same time, look for European players to increase investments in the ASPAC region — and vice versa.
Amid caution and concerns of a global recession, we remain optimistic for 2023 to be resilient following the lows and highs of the pandemic.
All charts and statistics sourced from Refinitiv Deals, accessed on 13 Feb 2023.
