Lessons your firm can learn about M&A growth trends from industry interaction data

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The M&A market continues to fluctuate as inflation remains sticky and companies wait until highly anticipated interest rate cuts start to materialize. But change is afoot—Goldman Sachs analyzed 2023 M&A activity and found it in line with pre-2018 median levels, with average monthly volumes improving.

The following data has been aggregated and anonymized from the Affinity platform.

Behavioral deal data and the impact on the M&A market

By understanding how many mandates are closing, how long deals are taking to close, and the amount of competition between buyers, we can pinpoint where the industry is succeeding beneath the surface. We can also dive into interactions to see how bankers communicate with their clients and prospects.

M&A deals are closing faster than ever

In 2019, it took an average of 350 days from the day a deal was created to the day it was closed. In 2021, that number dropped to 200 days. H1 2022 saw the average plummet to just 56 days.

This rapid turnaround time aligns with similar growth in the pool of potential buyers. In 2019, banks saw an average of 75 potential buyers per mandate. Now, they're seeing an average of 200. And these deals are closing. Affinity customers are securing more mandates in 2022 than ever. H1 2022 saw a 40% increase in mandate volume.

Increasing competition between larger pools of buyers means that companies with serious offers are driving faster deals and higher deal values as more banks are vying for sellers' attention.

Better quality deals and closer networks are driving interactions down

Bankers using Affinity continue to close deals at a scale only bested by the M&A boom of 2021. It also appears that closing these deals is taking less effort as their teams continue to get more efficient.

Affinity users are taking fewer meetings in 2022 than in 2020 or 2021. From 2019 to 2021, meeting volume doubled as bankers adjusted to remote workflows. Now, the meeting count has settled back to 2019 levels. Emails have followed the same pattern: doubling from 2019 to 2021 and returning to pre-COVID levels through H1 2022.

Network growth has also slowed after an even more meteoric rise. After tripling from 2019 to 2021, growth (defined by new contacts created in Affinity), is now on par with 2019 rates.

More mandates are closing faster, with more buyers fighting for deals, but communication is decreasing. Affinity's dealmakers are leaning on their existing network (and technology) to close more deals with less outbound work. Another source of this network slowdown is global dealmakers turning their attention toward business partners they're already familiar with and choosing to rely on opportunities they know they can trust as the industry feels uncertain yet again.

The M&A industry is resilient and hoping to hold onto the growth seen during the worst COVID-19 pandemic. So far, 2022 has been promising. If your team wants to hold to your successes over the previous two years, you'll need to continue to build a brand that your business partners can trust.

Delivering on mandates efficiently, supporting your strong network, easily showcasing prior successes, and building assurance your team is the right one for the job ensures you're always top of mind for the fastest moving mandates on the market.