ANALYSIS: 2023’s Spinoff Deal Count Was Third-Highest in 10 Years

The number of spinoffs announced in 2023 didn’t break any records despite their quick start to the year. Yet spinoff deal counts over the past few years suggest that this transaction type remains popular, which the continued coverage of spinoffs and other corporate divestitures in business or M&A news confirms.

The mergers and acquisitions market finished 2023 with 211 spinoffs—defined as deals that involve the creation of independent companies through the sale or distribution of new shares of an existing business or division of a parent company. Despite the slight decline from 2021’s record high (234) and 2022’s near-record total (232), 2023’s deal count was the third-highest in the last 10 years.

Companies use spinoffs for a variety of reasons including improving profitability, streamlining processes, pursuing new opportunities, and combating antitrust concerns. In a tough M&A market like last year’s, it makes sense that the number of spinoffs wouldn’t have declined dramatically. And since 2021 was an outlier for M&A activity, breaking multiple dealmaking records over the last 10-plus years, 2023’s spinoff results are nothing to sneeze at.

Big companies like Kellogg Co. and General Electric Co. completed (or are expected to complete) spinoffs in 2023 and 2024. International companies have also reported potential spinoffs or asset sales in the coming year, so the number of spinoffs in 2024 may remain similar to 2023’s count.

But quarterly data for the number of spinoffs or deal counts tracked over the course of the year don’t show a pattern for this type of transaction like those that can be seen with global M&A deal volumes.

Global mergers and acquisitions often experience a Q3-to-Q4 increase in a given year, yet the spinoff totals don’t reveal a comparable blueprint for predicting this type of transaction’s performance. Year to date, 41 spinoffs have been announced—the lowest Q1 count since 2020, when there were 36. However, since there’s little rhyme or reason to quarterly spinoff counts, it’s difficult to say how the year will finish.

Perhaps the divergence between the data and the predictions stems from the fact that the data don’t include other forms of corporate divestitures such as carveouts and splitoffs. Maybe the reasons companies have for pursuing spinoffs are evergreen, so spinoffs are always an option and there’s no true way to predict the number of these transactions when the impetus for them is specific to each company.

Bloomberg Law subscribers can find related content on our M&A Deal Analytics resource, as well as our Practical Guidance on Spinoff Transactions.

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