John’s Take - February 2023

There are a variety of wonderful sources about 2022 in review. But what about 2023?

Having spent the recent weeks reading and watching, what I am hearing as consistent amongst many of these resources is that H1 will see a hawkish position on the macroeconomy. Access to capital markets is down which also puts a damper on M&A activity. Also, in the US there are regulatory agencies which are playing a heightened role more so than before.

As a counterpoint, however, many strategics hold trillions in their treasury which can be used for M&A. Does this mean the use of internal capital? Probably but with a tight view on the value such an acquisition needs to serve.

What we at M&A Science are analyzing and summarizing from various sources is that US H1 performance should see a 5-10% increase in sourcing activity, flat on deal close volume, and down within single percentage point range in deal value. For the deals we do see, the time of diligence will take longer with a focus on growth. There will likely be more “no”s than “yes”s. The volume of sourcing will be up because companies are getting ahead of valuation recalibration but it's getting to the finish line that gets measured so that's where we see the numbers down.

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