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Venture Corporate Finance M&A Outlook 2023

posted 1 year ago

Concerns of a global recession have some business owners and investors rethinking their M&A strategy. We understand the need to be wise with your financial investments. However, the state of M&A in 2023 is not necessarily reflective of the overall economic climate. Here are a few things to keep in mind in the coming months.

The seller’s market is very strong

For various reasons, some of which are indicative of broader economic conditions, the seller’s market is extremely strong. In some cases, this is due to business operators choosing to exit the market because of the aforementioned concerns. In others, the value of their business has grown exponentially. We’ll unpack this specific situation shortly when discussing technology.

Nevertheless, buyers are equally interested in acquiring new avenues to grow their portfolios. The combination of both a desire to sell and an equal need for strategic growth continues to contribute to a strong seller’s market.

Buyers are interested in quality

This isn’t to say that buyers are in a free-for-all mindset, scooping up businesses haphazardly. Rather, we used the phrase “strategic growth” intentionally. Buyers across the board are interested in adding value to their brands. Hot commodities that look attractive on paper still need to contribute to bottom-line growth. A buyer may be looking at two different companies, both of which offer a similar (if not identical) product or service, and only acquiring one of them.

The quality of your pre-sale preparations, fueled by a thorough Transaction Readiness Report, can help position your company ahead of the competition.

Deals might be smaller

In 2022, there were no M&A deals larger than £10 billion. The latter half of the year saw a significant decrease in deals over £1 billion as well.

This doesn’t mean that the M&A sector is a free-for-all. Rather, it points to a cooling off in the high-end transaction range.

Nevertheless, there will be deals and transactions throughout 2023. We expect these smaller deals to be the norm with the larger transaction volume returning once the overall economic conditions have settled.

Technology

To clarify an earlier statement, one area where we expect to see significant activity in the M&A segment is in the technology industry. There is no shortage of possibilities here, with buyers looking to grow their market penetration via A.I., virtual reality, and digital currency acquisitions.

It’s important, however, to also remember what we said about the quality. Buyers will be more cautious with technology acquisitions, aiming to avoid fiascos such as the recent disaster with FTX. Again, preparation and transparency will be key to successful transactions.

Will the sellers market come to an end?

At some point, economic conditions will shift toward a buyer’s market. This may be due to a cooling off within the global economy or a sentiment reflective of perceived shortcomings within a particular industry.

However, when this shift will happen is difficult to predict. If anything, it’s important to remember that the M&A sector will respond to the market appropriately. It’s simply the case that the fundamentals point to continued strong performance of the seller’s market.

Whether its time to buy or sell, well help you navigate those complexities

As we mentioned before, we understand the concerns an entrepreneur may have about the current economic conditions and how they may affect the future of business growth. Several industries are highly sought after right now, and those within those segments should continue to see ongoing growth as well as opportunities for lucrative M&A deals.

Other industries will, likewise, continue to see transactions fuel their valuation. The deals may be smaller, yet equally advantageous for buyers and sellers alike.

Regardless of where you fall within this spectrum, we can help. Our team of experts has decades of combined experience helping both buyers and sellers navigate the complexities of the M&A process. We start with a free and fully bespoke Transaction Readiness Report, moving you through the entire process with diligence and accuracy.

Would you like to know more about our proven approach to selling IT and Telecoms businesses? Then send us a message. We’ll look over your needs and schedule a time to help you get started with your next M&A deal.

 IT deals completed in January 2023

Clovertec               IMS Technology                   3C Technology

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