Heading into 2022, Wall Street’s deal-makers thought it would be hard to maintain 2021’s record-breaking pace for mergers and acquisitions. Still, few thought their businesses would fall by too much.

But the mergers and acquisitions business hit turbulence in the middle of the year and hasn’t recovered.

Activity held up compared with historical trends, with about 53,863 deals worth $3.6 trillion announced in 2022, according to Refinitiv, but dropped sharply in the second half of the year. And while the yearly total pales in comparison with 2021’s $5.7 trillion worth of transactions, it’s in line with the value and number of takeovers announced in the previous six years.

“I would sum it up as significantly less activity than in 2021,” said Marco Caggiano, the head of North American mergers and acquisitions at JPMorgan Chase. “But because 2021 was historically at such a high level, 2022 looks like a more normalized level of volume.”

Perhaps the bigger question is how things look for the future. Bankers, lawyers and private equity executives suggest that, for all the challenges they faced, there are reasons to be optimistic about 2023.

Economic headwinds intensified: Deal-makers like to say that the mergers business is built on corporate confidence. At the start of 2022, the rising markets, strong corporate profits and cheap debt that powered 2021’s surge in transactions appeared likely to stick around. Microsoft’s $69 billion bid for video game publisher Activision Blizzard, the biggest takeover of 2022, was unveiled just a few weeks into the year. (That deal now faces challenges from the United States.) Indeed, four of the five biggest deals this year, including Elon Musk’s $44 billion takeover of Twitter, were announced before May.

All that was before a potent combination of economic developments — volatile markets, rising inflation, climbing interest rates and geopolitical instability spurred by factors such as the war in Ukraine — shook company boards’ willingness to take risks.

Financing became more complicated: Rattled nerves didn’t only affect corporate directors and management teams. Banks that helped finance takeovers were increasingly unable to sell on the debt to other investors, leaving them with billions of dollars stuck on their books. (Lenders to Musk for his Twitter deal have had to hold on to about $12.5 billion worth of loans, hoping to avoid booking huge losses by selling them now.)

That jolt to a crucial part of deal-making unnerved would-be buyers and sellers. “We don’t need low interest rates for a robust mergers and acquisitions market, but we need a predictable, stable financing market,” said Stephan Feldgoise, a co-head of global mergers and acquisitions at Goldman Sachs.

David Sambur, a co-head of private equity at investment giant Apollo Global Management, added that while many had anticipated more difficulties in obtaining financing this year, “the speed of it, I think, surprised a lot of people.”

Government challenges grew louder: Not all obstacles arose from economic factors. Government regulators have taken a tougher line against big deals, particularly in the United States. Lina Khan of the Federal Trade Commission and Jonathan Kanter at the Justice Department’s antitrust division have sought to widen the grounds on which they could challenge transactions — even if they lose some cases along the way.

In some ways, that more interventionist approach catches up to the attitude of regulators in Britain and the European Union.

That shift in philosophy led the FTC to sue to block Microsoft’s takeover of Activision, a deal that under prevailing antitrust standards probably wouldn’t be seen to substantially harm competition. But Khan has argued that approach ignores the effects of big mergers on issues like innovation, particularly as corporate titans become bigger.

Still, some deal-makers played down the risks that heightened antitrust scrutiny would have for boards and executives looking to do an acquisition, since most will still get done — it just might take longer.

SPACs had a rough year: One part of the mergers and acquisitions market suffered an especially sharp decline: special purpose acquisition companies, known as SPACs or blank-check funds, which raise money in the public markets to buy privately held companies.

Just as quickly as SPACs surged in popularity in 2020 and 2021, so they fell out of favor in 2022: 170 such funds were raised, a 75% decline from 2021, according to Refinitiv. Perhaps more important, the number of announced SPAC mergers fell 22%, to 226, while the number of canceled SPAC combinations more than doubled, to 55.

The reasons for the cooling off, experts say, include closer scrutiny of blank-check funds’ governance, as well as the relatively poor performance of companies that have gone public by merging with SPACs.

What lies ahead? Despite all those challenges, mergers and acquisitions advisers (who tend to be a largely optimistic lot) believe there’s reason to hope for a respectable 2023. Among them is the fact that many companies want to expand or shift their business strategies, and doing a deal is often the best or easiest way of doing so.

That doesn’t necessarily mean a uniform pace of deal-making. Caggiano expects 2023 to start off slowly before ratcheting up, in a reverse of 2022. But he and others believe that mergers activity should remain fairly robust.

“The strategic imperatives that came out of COVID — repositioning, scale, onshoring — none of those have changed,” said Feldgoise of Goldman. “Boards are saying, ‘I want to fortress my company.’ ”

And even the challenges that 2022 has presented shouldn’t be, well, deal breakers. Take higher financing costs: “The cost of money now is essentially normal,” Sambur said.