Welcome to the fourth and final edition of the year of KPMG’s Nordic Deal Trend Report covering M&A activity across the region in Q4 2022. Looking into the deal trend for number of announced deals across the Nordics the latest couple of years, we clearly note a turn of ups and downs. In Q4 2022 alone, we stand at 489 deals. The pre-pandemic years 2019 and 2020 both recorded slightly above 1,500 announced deals, whereas 2021 ended with a whopping level of more than 2,600 announced deals. Until now in 2022, 2,424 deals are announced – slightly down compared to last year, but still above what happened before the COVID-shutdown period.
I must admit that contrary to my beliefs after the first half of the year, the full-year trend has been unpredictably robust – especially given the array of macroeconomic challenges we are continuously faced with. There is still a fair level of deal-making taking place and, talking from my part of the world, our deals pipeline for the new year is, actually, still relatively strong.
Sector breakdown by deal count Q4’22 vs. Q3’22
Though number of deals are down with almost 30% compared to Q3, there are no changes to the sector split. As we have grown accustomed to, technology deals still make up just above a quarter of the total announced deals, followed by manufacturing (19%), services (13%), real estate (12%) and energy (10%). In total, the five largest sectors make up above three quarters of all deals – same as for the earlier quarters of the year.
So, what does the new year hold for us from a deal-making perspective? No doubt investors – both corporates and financial – will need to stay focused and on top of their game in a world of financing pressures stemming from higher interest rates and slower growth. The two top key-takeaways from my perspective are to remember doing comprehensive due diligence and to put an increasing focus on ESG issues.
Investors need to diligently analyse their investment targets for potential business-model uncertainties and weak supply chains and look for resilient financial performance and businesses that have a firm control of the increasing cost levels – also tech due diligence is increasingly important both from a performance and, not least, a security perspective. With regards to ESG, investors increasingly put focus on this as a value driver – from our recent experience, investors put more focus on areas including energy efficiency and emissions, supply chain sustainability and social aspects such as diversity and an inclusive nature which may set the target businesses apart from others.
Wishing you all a good start of the new year, I look forward to experiencing how resilient the Nordic M&A market will be – even in this tough financial climate.
Jan Hove Sørensen
Partner, Head of Corporate Finance and M&A
KPMG in Denmark
Partner, Head of Transaction Services
KPMG in Denmark