Insight Weekly: North America M&A tumbles; SPAC IPOs decline; US companies cut costs

Today is Tuesday, July 25, 2023, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. to be notified of each new Insight Weekly.

In this edition of <b>Insight Weekly</b>, we put the spotlight on the North American M&A market. S&P Global Market Intelligence tallied 3,828 deals in the US and Canada in the second quarter of 2023, a decline of 30.4% from the same period in 2022. In the first half of 2023, aggregate bank M&A deal value plunged year over year to $617.8 million from $3.50 billion. Credit union-bank deal activity has been particularly slow this year, with only four deals announced so far, compared to a record 16 announcements in 2022. Investor and private equity transactions are accounting for a larger percentage of bank M&A activity amid the ongoing deal doldrums. Pension fund involvement in broader M&A appears to be on track for a flat-to-slight improvement in 2023 compared to a year earlier, though encouraging signs of cooling inflation and speculation that interest rate hikes are near the end could encourage a stronger second half.

Four US blank-check companies went public in the second quarter, the lowest quarterly total over the last four years, according to Market Intelligence data. High interest rates and expectations for additional interest rate hikes in July further extended the dry spell for special acquisition companies (SPACs) IPOs, which typically go public to raise cash and acquire other businesses. The aggregate disclosed value of SPAC M&A for the second quarter was $890 million, significantly below the $2.14 billion value of deals struck in the second quarter of 2022.

US corporations cut costs in the first quarter of the year as rising interest rates and a weakening economy worsened operating conditions. The total operating expenses of companies rated investment grade by S&P Global Ratings dropped 5.3% in the quarter to $2.858 trillion. Companies with weaker balance sheets also trimmed costs. Total operating expenses of non-investment-grade companies fell 3.8% from the fourth quarter of 2022 to $628.71 billion, according to the latest Market Intelligence data.