Dealmakers celebrating their third-strongest year on record are fretting 2019 will herald a steep drop in mergers and acquisitions worldwide, as market jitters and economic uncertainty take their toll.
The fourth quarter of 2018 is on track to end with the volume of global M&A activity down 27% year-on-year, and down 16% from the third quarter, at $724 billion, Refinitiv data shows.
A stock market selloff and concerns over America's escalating trade row with China weighed on dealmakers' confidence.
This is despite global M&A volumes reaching the third highest year on record in 2018, up 20% from a year ago to $3.91 trillion in announced transactions.
This makes 2018 the second strongest year for dealmaking since the 2008 financial crisis.
Analysts said that stock market volatility was heavily prevalent in the final few months of the year. They added that any deals that were being discussed became harder for buyers and sellers to agree on the right price, causing several transactions to stall.
The S&P 500 languished at 15-month lows this week, as disappointing earnings reports added to the gloom after the US Federal Reserve quashed hopes of a toned-down approach to its interest rate trajectory.
The European Central Bank has ended its stimulus scheme, adding another layer of uncertainty to the region. China and other major economies in the region have also slowed.
Among this year's biggest deals were Japanese drug maker Takeda Pharmaceutical's $64 billion deal to buy London-listed peer Shire, Walt Disney's sweetened $71 billion bid to buy the bulk of Twenty-First Century Fox's film and television assets, and US health insurer Cigna $52 billion deal to buy pharmacy benefits manager Express Scripts.
The US made up the biggest part of the global M&A market in 2018, with activity in the region rising 32% year-over-year to $1.7 trillion, according to Refinitiv.
Announced deals in Europe rose 32% to $975 billion in 2018, while M&A in Asia-Pacific fell 2% to $871 billion.
Also weighing on M&A is the rush of technology companies such as Uber, Lyft, Slack and Pinterest to get ahead of a potential economic rout by launching initial public offerings rather than seeking potential acquirers.
Private equity firms could also have a hard time clinching acquisitions in 2019, if a rout in the leveraged finance markets in December continues, dealmakers say.
However, should debt markets stabilise, cash-rich private equity firms could have an edge in hunting for acquisition bargains in a suppressed stock market.