Growth series: Optimistic for an uptick in deals

 

Consolidation remains strong in key industries

 

Although merger and acquisition volume decreased markedly in 2022 following the record-breaking surge of late 2021, there’s optimism that deals will experience year-on-year growth in 2023 with help from a second-half surge.

 

Consolidation is occurring in each of the following industries — technology, healthcare, financial services, professional services, and media and entertainment. So there continues to be a promising outlook for M&A in those industries even during a period of economic recession uncertainty.

 

“Ultimately the market is constantly adjusting,” said Elliot Findlay, National Managing Principal for Mergers & Acquisitions for Grant Thornton LLP. “I would just say the market is resetting, and there’s an expectation that M&A volume will increase in the second half of 2023.”

 

Findlay provided insights on the current inorganic growth environment during a conversation with Grant Thornton Advisory Services National Managing Partner, Wade Kruse, for an episode of the firm’s eight-segment article/video series on growth. Findlay said the softening of forecasts led to lower pricing expectations and in turn, a slower market following the M&A boom of 2021. 

 
 

2:18 | Transcript

 
 

 

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Re-examination is in order

 
 

Position your business for growth

 

There’s optimism about the M&A outlook for 2023. Almost three-fourths (72%) of respondents to Grant Thornton’s survey of M&A professionals from August 2022 predicted that deal volumes would increase.

 

In a shaky economic environment, business leaders need to do the tough work of reconfiguring their organizations to prepare for a transaction process. A softening of revenues coupled with increases in operating expenses has resulted in margin compression that many companies need to address. For sellers, that might mean re-examining their cost structures, shedding assets that aren’t essential to their business and making sure they’re in the best possible position to drive growth.

 
 

3:07 | Transcript

 
 
 

Be prepared

 
 

Growth remains achievable

 

Comparing today’s market to the valuations achieved in 2021 is giving sellers pause in taking their businesses to market. Some sellers are waiting for brighter days ahead, when they might be able to achieve higher multiples. Though for some, including those sellers in the Baby Boom generation who are eager to cash out and retire — and for private equity investors ready to reap the benefits of their investments — now is the time to sell.

 

Opportunities for deals remain plentiful, and to achieve the best outcomes, preparedness is key.

 
 

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