A dealmaking drought is set to continue this year as firms batten down the hatches for a prolonged period of rampant inflation and stock market turbulence, analysts have warned.

The value of announced deals globally slumped nearly 25.5 per cent year-on-year to $1tn in the second quarter of 2022, according to data from Dealogic, as Russia’s invasion of Ukraine and fears of a looming recession gave dealmakers the jitters and sparked a major slowdown in transactions.

Analysts said dealmakers had shunned M&A so far this year as would continue to do so as they prepared for a looming recession.

“Companies are standing back from M&A in the short term as they are more focused on the impact of a recession on their business,” Alison Harding-Jones, Citigroup’s EMEA head of M&A, told Reuters.

“The timing for dealmaking will come but I don’t think it’s quite there yet.”

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