www.therevenuearchitect.com/p/why-2023-will-be-a-make-or-break
1 correction found
Corporate M&A always picks up in economic downturns, as valuations soften, especially for companies who are not the clear winners in their categories.
This is incorrect as a general rule: historically, recessions have typically coincided with steep declines (not increases) in global M&A activity, and M&A fell sharply during major downturns like 2008 and early 2020.
Full reasoning
The post makes an absolute claim (“always”) that corporate M&A increases during economic downturns.
However, historical evidence directly contradicts this:
- McKinsey’s analysis of the 2008–2009 downturn states that in US recessions since 1980, the value of global M&A activity typically declines sharply (around 50% in the first year). That is the opposite of “always picks up.”
- Refinitiv data reported by Axios for early 2020 (a sharp economic downturn period) shows global M&A activity fell sharply, with dollar volume down 28% and deal count down 14% in Q1 2020.
Because the post uses an absolute (“always”), a single well-documented counterexample (and here we have multiple, plus a long-run historical pattern) is sufficient to show the statement is false as written.
2 sources
- What’s different about M&A in this downturn | McKinsey (Jan 1, 2009)
“M&A activity fell sharply in the fourth quarter of 2008. Since 1980, US recessions have led to steep declines in the value of global M&A activity—typically, of around 50 percent during the first year.”
- M&A activity crashes | Axios (Mar 31, 2020)
“Global merger and acquisition activity fell sharply in the first quarter of 2020, with dollar volume dropping 28% to $698 billion and the number of deals off 14% to 9,616, according to preliminary data from Refinitiv.”