Clouds gather and M&A slows

The macroeconomic outlook is dimmer than it was 12 months ago. Real GDP growth in the US is expected to be in the region of 3.6% for 2022, while there is little agreement over what the coming year will hold. Forecasts have been wide, with some projections showing a recession and others being more upbeat. One thing is for certain, though—growth in 2023 will be weaker than it was last year.

US inflation prints were awaited with bated breath through 2022 as prices surged and stock markets tumbled. After reaching a four decade-high midway through the year, the positive rate of change began to decline, offering hope and signaling that the Federal Reserve’s determined tightening actions are having their desired effect.

Political certainty

Whether the much discussed “soft landing” will be achieved remains a point of intense debate. Both the jobs market and consumer spending in the US remained remarkably strong through to the end of 2022, defying expectations. Against this backdrop, M&A inevitably cooled after the previous year’s record-smashing performance, but remains above pre-pandemic levels.

On the political front, the US midterm elections passed without incident and little change to the Senate, offering a degree of certainty in the country. The outcome has provided some stability, which is generally favorable to investment and M&A activity, particularly when considered in conjunction with the large-scale investments being promoted by the current administration.

In Brazil, Latin America’s largest economy, Luiz Inácio Lula da Silva’s defeat of then-president Jair Bolsonaro on 30 October was mired by allegations of election fraud and widespread protests. However, Lula and his cabinet were sworn in at the National Congress on 1 January 2023, finalizing the transition and putting the country on firmer ground in spite of the more challenging growth outlook the country, like so many others, is now facing.

Published in association with Datasite, Deal Drivers Americas provides an in-depth review of M&A activity in 2022, as well as a look ahead to 2023.

The report is also available on datasite.com.