A Midyear Report on M&A Opportunities for Deal Makers
The midyear 2023 M&A market appears to have hit a standstill. Dealmakers face a litany of mixed signals that have caused deal values and volume to drop off significantly. Buyers want to get deals done, but struggle to close them. Sellers believe in their businesses but fear selling at market bottoms. Industries have felt the impact of government intervention in M&A regulation and competitive reviews. Yet, despite these challenges, no one believes that the era of M&A is over. Teams are already preparing for the future with a new M&A strategy that is focused on resilience to crisis and risk management.
A CLOSER LOOK AT THE NUMBERS
With an overall global M&A value down by 44%, and the leveraged deal value falling by 54%, everyone is looking for a way to increase value creation. Corporate M&A has been more resilient, due to access to lower-cost capital, but private equity exits have become more difficult to execute. Conditions vary by industry, with telecommunications embracing scale deals, and consumer product teams struggling with base performance determinations. Government interventions, particularly in M&A regulation and competitive reviews, have slowed momentum.
WHAT DEALMAKERS CAN DO TODAY
The M\&A market is paused, but not over. Those who are best prepared to act quickly, when the market inevitably opens up again, will be the ones who succeed. But, what should dealmakers be doing today to seize future opportunities?
Do your homework – Be ready to act when the market does open up. Start doing your research now on potential targets and risks. Develop your M&A strategy, sector screening, and due diligence for execution when the time comes.
Be ready to seize the moment - Certain industries will have the chance to capture opportunities as the market heats up, such as commodity-based industries, pharmaceuticals, and banking. Be cautious, however, as some of the worst deals in history have been done in similar market conditions.
Prepare to invest in capability – Smaller, under-the-radar deals for new intellectual property, new capabilities, and new markets are still happening and likely to accelerate. Don't forget that generative artificial intelligence (AI) could be a new catalyst for capability dealmaking.
Be aware of asset sales - PE exits will pick up as portfolios age. Likewise, M&A teams are preparing businesses to be divested from corporate portfolios. Stay aware of what assets may come to market.
In conclusion, it’s an unusual economic climate that has paused the M&A market. However, it's not an end to M&A activity. With the right preparation, dealmakers can ensure their teams are ready to act quickly when the time comes. Do your homework, be ready to seize the moment, invest in capability, and be aware of asset sales. By preparing your team to be focused, efficient, and ready to act, you'll be best prepared to seize the future opportunities.