Global M&A Industry Trends: 2023 Mid-Year Update

The global M&A landscape in 2023 is shifting from mega-deals to a healthier level of mid-market transactions driven by things like digitalisation, decarbonisation and value creation. Despite an 8% decline in deal volumes in the first half of the year due to economic uncertainties, volumes remain above pre-pandemic levels.

Financing challenges have led to an emphasis on alternative funding and value creation strategies. We are already seeing greater focus on strategic repositioning through portfolio optimisation, digitalisation and business model changes. However, underexplored areas like energy efficiency, green tax credits and sustainable financing are also worth a closer look.

What trends have emerged?

As we navigate 2023, the M&A market is being shaped by various factors. They include:

Tech-driven transformation

Transformation and disruption continue to go hand-in-hand with companies leveraging technology to digitalise and transform their businesses. When this is coupled with the push towards net zero strategies, unique M&A opportunities emerge. Amid these changes, CEOs are urged to adopt bold, but not necessarily big, M&A strategies.

Increased due diligence

Preparation remains crucial in the current market, particularly for sellers, with due diligence processes taking longer due to challenging macroeconomic conditions and tight financing markets. The bottom line is: be ready for more intrusive due diligence and a greater level of scrutiny.

Cash-rich corporates

Deal volumes have decreased, especially for larger deals. But cash-rich corporates still have an edge. They can make acquisitions while the tough financing environment reduces competition for assets—but this window of opportunity won’t last forever.

Private equity’s portfolio focus

Private equity (PE) firms are focusing on portfolio optimisation and public-to-private deals using a combination of financing structures. They are also focusing on sustainable investments and transformational operational enhancements to generate returns.

Restructuring on the rise

Restructuring activity is on the rise due to financing pressures, inflationary impacts and a low-growth economic environment, which could stimulate increased distressed M&A activity. Companies should keep a watchful eye on refinancing risks and take early action to secure alternative capital sources as the opportunities arise.