I received this outlook for the year from pwc. I’ve been told by other investment people that there are many smaller companies ripe to be acquired. This is the new innovation in a mature market. You’ll see the larger companies acquiring technology and expertise.
Overall deal volume and value fell in 2023 relative to 2022, which had been lower than 2021’s record high. Transactions in 2023 were largely aimed at addressing acquirers’ strategic gaps and/or expanding their capabilities. While there were industrial manufacturing mega deals (greater than $5 billion in enterprise value) in 2023, there were fewer of them compared to 2022.
Companies are increasingly undertaking thorough portfolio reviews as they seek to divest non-core assets and market dynamics continue to give buyers pause with respect to making acquisitions. These dynamics include macroeconomic uncertainty, the high cost of borrowing, and still-high valuations. A rebound in M&A activity will most likely require improved macroeconomic clarity, increased corporate confidence, and stable financing markets. Once these requirements are met, we expect the rebound in activity to be accelerated due to the preparatory work currently being performed by prospective sellers.
For deals currently being completed, buyers are seeking to mitigate risk, often through purchasing smaller, strategic assets and/or structuring deals in unique ways (such as making greater use of private capital and earnouts).
We anticipate industrial manufacturing deal activity in the first half of 2024 to be stable relative to 2023, followed by an increase in activity later in the year.
