Every January, the industry is flooded with research and analysis trying to predict what the coming year holds for middle-market M&A. 2023 is no different, and if anything, people may be paying closer attention than usual in the midst of broad market uncertainty and a unique economic environment.

Rather than have you peruse each report on your own, we’ve gathered research from leading firms and interviewed three experts to get to the heart of the matter. Here we share the dominant economic trends, key challenges for dealmakers, which industries could see the most activity and the effects of the continued rise of ESG on the dealmaking process.

Dealmaking Outlook

2022’s M&A activity closed out not with a bang, but with a whimper. According to analysis from Greenwich Capital Group, transaction volume was slightly higher in the fourth quarter than in the second and third quarters of 2022, but still down significantly from the same time frame in 2021.

So what to expect from 2023? Halfway through the first quarter, industry research and expert analysis show that despite some tough headwinds, M&A is likely to remain strong.

Citizens’ survey of 400 U.S. middle-market company and private equity firm leaders found that the outlook for 2023 was upbeat, with dealmakers seeing M&A as the primary driver of growth for their businesses. However, that optimism was tempered by concerns about hiring, valuation and decreased deal confidence, with 42% of private equity firms saying the deal environment was weak, up from 29% in 2022.