As widely reported, there are notable challenges in the M&A market. Sticky inflation and stubbornly high interest rates mean finding the right source of financing (debt or equity) takes time and effort. The macro-economic and geopolitical environment has also contributed to protracted processes, while buyer and seller price expectations can diverge.
Nonetheless, there have been numerous recent completed deals where a compelling mix of strong business fundamentals, maintaining competitive tension and being well prepared for diligence queries has achieved strong returns.
Industries with cyclical resilience (e.g. Technology and Life Sciences) are also still achieving high valuations. It is also evident that the elevated levels of private equity ‘dry powder’ and/or fundraising activity means that there should be a strong appetite for deal-making in the coming year. Investors have also begun to factor in the challenges that have undermined deal activity in the recent past. Navigating wage inflation, energy costs and supply chain matters is increasingly the new norm.
For entrepreneurs and businesses looking to sell, those on the fundraising journey and acquirers strengthening their market position, the key to successful deal making remains preparation. Addressing the issues and areas of their operations that are increasingly adding value should be the priority for leadership teams. This extends into a deal environment covering technology risks (including cyber security), ESG assessments and a sharper focus on working capital management.
The overall trend has been for deals taking longer with all the inherent risks for maintaining value. This has resulted in heightened and broader levels of due diligence and the need for richer, data-based evidence from both vendors and acquirers. Again, this can be mitigated by addressing any areas of challenge in advance.
In conclusion, the deal landscape continues to evolve. Early and comprehensive planning and preparation with your advisors and stakeholders will help you shape a convincing transaction rationale and the value narrative for your pool of potential buyers, investors or funders.
How we can help
We can provide you with the expertise and the insights that will ensure you and your business are ready to achieve the best possible outcomes. We can create additional value by helping you in evaluating your working capital cycles, assessing your IT and ESG frameworks and optimising your operations/growth plans.
Our exceptional knowledge of the trade, private equity, debt and IPO markets (both UK and internationally), ideally positions our clients in the deal advisory landscape. Do not take our word for it, just ask our recurring client base!
We would be delighted to talk to you about your plans for 2024 and beyond – to help you succeed in shaping the future.
In the below deal matrix, you can read a quick sector overview for 2023, browse our disclosable deals for each sector and link through to sector-specific insights.
Discover our deal volumes across sectors and our expert analysis of the key trends in those sectors.