Merger and acquisition activity is returning to pre-pandemic levels after last year's record highs, as economic conditions become more volatile.
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Data from the law firm Simpson Grierson shows the volume of announced deals fell 31 percent in the first half of 2022 compared to the same period last year - on a par with 2020 and 2019.
It said half of the transactions were in the technology and medical sectors, and the total deal value slipped 10 percent to just under $9 billion.
Simpson Grierson corporate partner Andrew Matthews said global headwinds like rising inflation and the war in Ukraine were causing the market to pause, however, there was still a lot of cash around.
"The appetite to do the deals is still there, but the opportunities, risk and pace of deals will be different as inflationary headwinds rip through global and local markets," he said.
Overseas investment remained strong, with nearly 60 percent of transactions in the first half by offshore investors, Simpson Grierson said.
"The easing off in deal volume indicates that investors are taking a more reflective approach, perhaps looking for better deal pricing or terms, or re-evaluating previous acquisition strategies.
"The other consideration is the direction of Covid-19 impacts arising from last year's restrictions, which - from a buyer's perspective - are only hitting full year accounts now: the investment assessment is much easier to make on a Covid-impacted business because the return to normal represents a positive surprise for earnings," Matthews said.
He expected investors would pivot towards tangible assets that can pass on the inflation risk, which was why sectors like infrastructure, health and technology were showing resilience.
"Looking ahead, we can expect some long term owners of assets to feel the force of economic headwinds and look to sell down, and there's plenty of capital looking for a home, so there will likely be another flurry of M&A activity in due course but probably not to the heights we saw last year and perhaps for different reasons," Matthews said.
