The Deloitte View On M&A Prospects In 2023

M&A transaction activity in 2022 wasn’t quite on par with 2021 but was still remarkably buoyant, according to Deloitte M&A partners Jan Fitzell and Anya Cummins.

The 2021 M&A market was the most active M&A market in terms of deal volume since 2006. 2022 has remained exceptionally busy and even as compared to a record prior year and against the backdrop of Russia’s invasion of Ukraine, rising inflation and energy costs and significant economic uncertainty, 2022 will still be one of the busiest years on record for M&A.

We have seen the continued growth of private equity as acquirers of businesses in Ireland, together with international trade acquirers who have come through the Covid-19 period with strong balance sheets and a desire to grow into new markets.

While the market has cooled somewhat as compared to 2021, we are still seeing very strong levels of deal activity and appetite from buyers and investors remains very strong.

The second half of 2022 has seen a few more uncertainties as interest rates started to increase and inflation impacted on costs. However we are still seeing the quality businesses being competed for strongly, with financial services, TMT, energy and life sciences all particularly active sectors.

What is M&A Deal Origination?

Mergers and acquisitions (M&A) deal origination refers to the process of identifying, evaluating, and initiating potential M&A opportunities. This process typically involves identifying target companies or assets, performing due diligence to assess their value and potential fit with the acquiring company, negotiating the terms of the deal, and ultimately completing the transaction.

There are various ways in which M&A deal origination can occur. For example, a company may proactively seek out potential acquisition targets through market research, networking, and strategic planning. Alternatively, a company may receive unsolicited offers from other firms looking to acquire it or its assets.

There are several key considerations that are typically taken into account during M&A deal origination, including the financial and strategic fit of the target company or asset with the acquiring company, the potential impact on shareholders and stakeholders, and the potential risks and opportunities involved in the transaction.

M&A deal origination is typically led by a company's corporate development or M&A team, which may work closely with legal, financial, and other advisors to evaluate and pursue potential opportunities.

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ways to originate M&A deals

There are a number of ways to originate M&A deals, including:

1. Internal sourcing: This involves identifying potential M&A opportunities within a company's own industry or market.

2. External sourcing: This involves looking outside of a company's own industry or market for potential M&A opportunities. This can involve working with investment banks or other financial advisors to identify potential targets or buyers.

3. Networking: This involves building relationships and connecting with potential M&A partners through industry events, conferences, or personal connections.

4. Cold outreach: This involves reaching out to potential M&A partners without any prior relationship or introduction. This can be done through direct mail or email campaigns, or through targeted advertising efforts.

Once potential M&A opportunities have been identified, the process of evaluating and negotiating the deal can begin. This can involve due diligence, financial analysis, and negotiations around terms and conditions.

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methods and approaches to identify potential M&A targets

There are a variety of methods and approaches that companies may use to identify potential M&A targets. These may include:

1. Industry research: Researching industry trends, market conditions, and potential acquisition targets within a specific industry or sector.

2. Networking: Identifying potential acquisition targets through connections and relationships within the industry or through industry events and conferences.

3. Strategic fit analysis: Analyzing potential acquisition targets to determine how well they align with the acquiring company's strategic objectives and business model.

4. Financial analysis: Evaluating the financial performance and potential of potential acquisition targets.

Once potential acquisition targets have been identified, companies may initiate contact through a variety of methods, including direct outreach, letters of intent, or the engagement of financial advisors or investment banks to facilitate the process.

It is important for companies to carefully consider the potential risks and benefits of any M&A deal and to conduct thorough due diligence on potential acquisition targets before proceeding with a deal.

What Should We Expect With Oil & Gas M&A Activity In 2023?

Q&A: The State Of Oil & Gas M&A Activity & What To Expect In 2023

The current landscape of M&A and A&D dealmaking in the U.S. oil and gas industry looks a lot different than what it did in the 2015-2019 period. During the pandemic, commodity prices sank to historically low levels (WTI crude oil futures went negative in April 2020).

Today, despite strong energy prices resulting from the post-pandemic economic recovery and a reshaping of global energy flows triggered by Russia’s invasion of Ukraine, oil and gas companies face new headwinds such as record-high inflation, rising recessionary risks, the energy transition, and concerns about oilfield cost inflation—all of which are having material impacts on how M&A and A&D deals get done.

Optimism continues to swell, however, that the increase in deal momentum experienced during the second half of 2022 will carry over into 2023. Upstream M&A and A&D deals reached a year-to-date high of more than $16 billion of transacted value during Q3 2022, according to Enverus. That was achieved despite continued volatility in oil and gas prices and oil and gas company stocks still missing market recognition.

Steps To Get A Business Loan

Introduction

Don't let the complicated process of getting a small business loan deter you. There are ways to get the money you need without having to deal with a lot of red tape or taking on too much risk. In this article, we'll discuss how to qualify for a small-business loan in 5 steps.

Determine your loan goals and then apply

Before you can apply for a loan, it’s important to determine how much money you need, how much of that money should be borrowed, and how long you want to borrow.

First, determine the amount of money needed for your business. Then consider what percentage of that amount could be borrowed from the bank or other lender (i.e., the ratio between funds from investors versus funds from lenders).

Next, consider how much interest rate is charged by lenders and whether this rate will affect your ability to pay back loans in full over time (usually five years).

Do you want to stay Ahead Of Emerging Trends In Business Acquisition & Sale?

Determine how much money you need

The first step in getting a business loan is determining how much money you need. You can get an estimate by asking yourself some questions that will help you determine the amount of funding your business needs, including:

• What do I want to do with my business? If this is something that has never been done before, then it will take time and investment to make it successful.

• How big is my market share? The more demand there is for my product or service, the more likely people are going to buy what I have to offer. This will also mean more competition, which means less profits overall.

• Is there enough demand right now? If so many other people are offering similar services/products at cheaper prices than yours, then chances are even though they might be able to afford them now, they probably won't be willing later on down the road because there may already be too much competition in their area."

How to Qualify for a Small-Business Loan in 5 Steps

You've been working hard to get your business off the ground, and now it's time to look at how you can fund some of the goals that have been on your mind. You may be thinking about getting a loan from a bank or other financial institution, but where do you start?

The first step in getting approved for a small-business loan is determining what kind of financing is right for you. Your lender will be able to help with this decision by explaining what options are available and any requirements that need to be met before they'll give out the money they promised.

Here are five steps that will help guide you through the process:

1. Understand the true cost of borrowing

Before you start calculating the true cost of borrowing, you should understand some key terms.

• Interest rate: The amount of interest charged by a lender per year on an outstanding balance. For example, if you borrow $10,000 and are charged an annual percentage rate (APR) of 6%, your monthly payments would be $592 over 60 months ($10,000 divided by 12 months multiplied by 6%).

• Fees: One-time charges made to cover administrative expenses or to compensate the lender for services rendered. You may need to pay these fees when applying for a loan and again when closing out your loan at its maturity date. They might include origination fees, application fees, appraisal fees and processing fees.

• Penalties: Charges that penalize borrowers who fail to make timely payments or go into default on their obligations under their contract with the lender.

2. Obtain the necessary documents before you apply

Before you apply for a business loan, it’s important to obtain all necessary documents. The documentation requirements vary by lender and may include:

• Financial statements

• List of assets (including any real estate owned)

• List of liabilities

• Proof of income or employment history

If you don’t have the necessary documents, you may be asked to provide them before your application can be processed. If this happens, it may take longer to process your application because there will be more back-and-forth with lenders about what information they need from you and how long it will take them to get these items from third parties like banks or other financial institutions. It’s also important that all documents are certified by their original source—for example, if someone signs a letter certifying that they have good credit history with their bank as “President and CEO," then this must be signed by both the president and whoever holds that position at that particular institution so it can truly be considered "certified."

3. Find out which type of loan is best for you

Before you apply for a business loan, it’s important to understand the different types of loans available and how they work.

• Business loan vs. line of credit

• A short-term loan is a business financing option that gives you access to cash upfront and pays off in one lump sum or in installments over time. If you need money quickly, this option can be extremely helpful. However, keep in mind that there are fees associated with these types of loans, so you may want to explore other options first if possible.

• A long-term line of credit is similar to an open-ended revolving account at a bank where payments are made monthly with interest charged on the outstanding balance. This type of arrangement works well for businesses that have consistent sales but fluctuating cash flow because payments aren’t due until after they happen; however, interest rates tend to be higher than those for traditional loans.

4. Apply with online lenders in addition to banks

It's important to keep in mind that online lenders are not for everyone. If you're looking for a small business loan, it might be best to start with your local bank or credit union. However, if you want to make sure that you can get approved for a loan regardless of your credit history or financial situation—and don't want to pay high interest rates—online lenders may be the way to go.

There are several reasons why working with an online lender could be beneficial:

• Online lenders do not have as many restrictions on who they can lend money too; therefore, they're often more likely than banks and credit unions to give out loans even if someone has a poor credit history or low income. Of course, this doesn't mean these options won't require collateral (otherwise known as security) in order for them

• For example, if it's a personal unsecured business loan then there may be no collateral required at all! This means anyone could potentially qualify without having valuable assets such as real estate or cars/boats etcetera..

5. Check your credit score to see where you stand

Your credit score is a three-digit number between 300 and 850 that lenders use to determine your risk as a borrower.

The first step in getting a business loan is to check your credit score to see where you stand. Your score goes up or down depending on what's in your credit report and how much debt you have. You can get free access to one of the three major credit reporting agencies (Equifax, Experian, TransUnion) by pressing "Credit Score" when they ask for an email address on their site or by visiting AnnualCreditReport.com.

There are many ways to improve your score: Paying off old debts, keeping new accounts open for at least six months and being consistent with payments will all help raise it over time.

Borrowing for your business can be a complicated process, but it doesn't have to be if you know how to prepare yourself and what to expect.

Borrowing money for your business can be a complicated process, but it doesn't have to be if you know how to prepare yourself and what to expect. There are many ways to borrow money for your business, and it's important that you know which kind of loan is best for you.

If you're applying for a loan from an institution or bank, then an application form will be required. If this is the case, then we recommend seeking out some guidance from a financial advisor or accountant before filing your paperwork with the lender in question. That way, they can help ensure that all of the necessary information is included on the form and provide any advice needed along the way.

Conclusion

Borrowing for your business can be a complicated process, but it doesn't have to be if you know how to prepare yourself and what to expect.

4 Deal Sourcing Trends Shaping 2023

The coming year is unlikely to see a marked departure from the deal sourcing tactics of 2022.

Instead, private equity business development professionals and other industry participants point to trends that they expect to gain greater traction in 2023, including creative approaches to marketing, new technology applications, increased enthusiasm for smaller deals and an earlier start to relationship-building.

Technology is a must-have in dealmaking, but when it comes to deal sourcing tech, not all acquirers find themselves in the same place on the adoption curve. In a shifting M&A landscape, corporates and financial investors may have significantly different tech adoption experiences in 2023.

Nevin Raj, chief operating officer and co-founder of private company intelligence engine Grata, says a growing disparity between corporates and PE firms may lead to one of the most poignant trends in tech adoption next year.

“What we see is that (PE) investors, especially early-stage tech investors, tend to be some of the first adopters of technology,” notes Raj. As a result, those investors tend to embrace technology within their deal sourcing workflows, too. In contrast, corporates are “actually the furthest behind” in the adoption curve, he adds.

Global M&A market – what happens next?

The global M&A market remained resilient in 2022 despite unprecedented uncertainty, according to a new report from global broker WTW. The report found buyers outperforming the wider market as recently as the third quarter, based on share price performance and completed deals.

However, deal volume slowed significantly in 2022 compared to last year’s record pace. Multiple factors have impacted M&A this year, including geopolitical turmoil, skyrocketing inflation, climbing interest rates and worries about a global recession. These issues are expected to continue into next year, making it more difficult for buyers to predict the profitability of potential targets, WTW said.

“An unprecedented number of disruptive forces have created headwinds for dealmakers, but they are also generating opportunities,” said Massimo Borghello, head of human capital M&A consulting, Asia-Pacific at WTW. “The fundamentals that drive dealmaking are still in place and, with valuations moderating after the historic levels reached in 2021, strategic and financial buyers alike will take advantage of better-priced opportunities for growth.”

Why Due Diligence is Critical in the Reshaping of Global Supply Chains

Merger and acquisition (M&A) due diligence is the process of investigating a target company before entering into a merger or acquisition agreement. It typically involves a thorough review of the target company's financial, operational, and legal affairs to identify any potential issues or risks that could affect the value of the company or the viability of the deal.

The purpose of M&A due diligence is to provide the buyer with a clear understanding of the target company's strengths and weaknesses, and to help the buyer make an informed decision about whether to proceed with the deal. It is an important step in the M&A process, as it helps to protect the buyer from potential unknown liabilities or problems that could arise after the deal has been completed.

M&A due diligence typically involves a number of different activities, including reviewing financial statements and other financial documents, analyzing the target company's operations and market position, and reviewing legal documents such as contracts and intellectual property agreements. It may also involve interviews with key personnel, site visits, and other forms of investigation.

M&A due diligence is typically led by a team of experts, including financial analysts, lawyers, and industry experts, who work together to evaluate the target company and identify any potential risks or issues that could impact the deal. The results of the due diligence process are typically presented in a due diligence report, which outlines the findings and recommendations of the investigation.

Dealmaking is back on the table for private equity firms focused on Asia. After the biggest global health emergency in more than a century put an almost complete stop to in-person site visits and meetings, executives are once again seeking opportunities where they can see potential for transformation and profitable disposal in the future.

Getting products from design and manufacturing and into markets along secure distribution routes will always be a key requirement for companies no matter what economic and geopolitical storms they may have to adjust to. This focus on distribution is heightening the interest in deals for companies that make supply chains work.

For example, according to research from global law firm K&L Gates, there were 53 PE deals involving logistics and supply chain in the U.S. from the beginning of the year up to August 2022 worth a total of $20 billion. This compares to $7.9 billion in 2020, and $5.1 billion in 2019.

11 Best Sectors To Invest In Heading Into 2023

With a recession on the horizon, many investors are cautious when it comes to putting their money in the equity market. However, although the S&P 500 is in bear territory, there are some sectors which are performing better than the others. In 2022, safe haven assets and defensive market sectors like utilities, healthcare, consumer staples, and gold have outperformed relative to the overall US market. The energy sector has also gained close to 50% year-to-date due to the Russian invasion of Ukraine.

Although defensive sectors are considered to be more lucrative investments heading into a recessionary environment, if the central bank manages to slow down interest rate hikes after achieving about 5.0% to 5.5%, then technology and high growth stocks can potentially recover. If that is the case, technology and semiconductor sectors are some of the ETFs that may outperform based on the sector rotation model.

Investing in exchange traded funds allows investors affordable access to legacy large-cap firms like AbbVie Inc. (NYSE:ABBV), NVIDIA Corporation (NASDAQ:NVDA), and ServiceNow, Inc. (NYSE:NOW).

Smaller deals gain favor as private equity pros look toward 2023

There are a few reasons why private equity firms might be more focused on smaller deals:

1. Risk management: Smaller deals tend to be less risky than larger ones, as they involve a smaller investment and therefore a lower potential for loss.

2. Greater potential for return on investment: Private equity firms typically aim to achieve a high return on investment (ROI) for their investors. Smaller deals may offer a greater potential for ROI, as there is often more room for growth and improvement in smaller companies.

3. Easier to manage: Smaller deals may be easier to manage, as there is often less complexity and fewer stakeholders involved. This can allow private equity firms to more effectively implement their strategies and realize value from their investments.

4. Access to a wider range of opportunities: Private equity firms may also be more focused on smaller deals simply because there are more of them available. With a wider range of opportunities to choose from, private equity firms may be more likely to find deals that align with their investment criteria and goals.

Middle-market private equity pros expect to see a preference for smaller, tuck-in acquisitions of companies instead of bigger, signature platform purchases as the world of mergers and acquisitions eyes a more uncertain dealscape in 2023.

Tighter credit is one reason for this pivot toward buy-and-build strategies for growing companies, along with a gulf between the that price sellers want to get for the companies and what buyers are willing to pay in private markets.

“Private equity firms want the most the market is willing to pay for their trophy assets, so they won’t sell them in this market,” said Graham Weaver, CEO and founder of Alpine Investors, a specialist in software- and services-company deals.

Private equity outlook in the face of macroeconomic headwinds

Private equity fund performance has been unprecedented in recent years, with returns generally outpacing public markets. However, current economic conditions have posed considerable challenges for the industry.

Factors such as high inflation, the ongoing supply chain crisis, ballooning interest rates, and the war in Ukraine have all contributed to a decrease in deal volume and lower overall equity valuations for sellers.

Those lower valuations, coupled with the high cost of debt, have made private equity M&A transactions less appealing to private equity firms. Although many firms have plentiful cash reserves and will likely put them to use in M&A where possible, difficulties in raising funds from investors may make even that alternative more challenging. In these challenging times, it is crucial that every investor have an expansive view of all aspects of a target — the tumultuous market alone is risk enough.

How to Prioritize Technology in M&A Integration

Technology is a central part of many M&A deals and is only going to play a more important role as time goes on. However, all too many businesses and business brokers fail to prioritize this aspect of M&A, risking a more complex acquisition process and numerous challenges around bringing two businesses together technologically.

Prioritize tech in exit planning

How can businesses make tech a priority when it comes to M&A integration? A recent article by channelfutures.com dived into the issue:

“Disjointed technology integration can negatively affect processes between two businesses, as well as put business objectives and synergy delivery at risk. Technology, in my experience, either makes or breaks the deal – it’s that important. M&A deals are subject to heavy financial scrutiny from shareholders and financial advisers, but good technical due diligence is often an overlooked area.” — Karen Thomas-Bland, Channel Futures. Source.

The key to effectively integrating technology in an M&A deal boils down to understanding the nature of the businesses involved. The article outlines three common paths to take:

Keep the two businesses separate and preserve the individual tech capabilities of both

• Integrate both business’ tech capabilities and coordinate across geographies, functions, sectors, and business units

• Use the integration as an opportunity to redefine the business in terms of tech — this is costly and complex but can be rewarding if done right

Deciding which route to take involves a comprehensive understanding of both businesses, their current capabilities, how they align, your budget, your future goals, and more.

Work with an M&A advisor

The M&A and exit planning process is typically complex and demanding, and technology adds a new layer of challenges to this. However, it’s essential to treat tech as a priority if you want a smooth, successful transaction.

At BizNexus, we can help you achieve this. Our community helps businesses through every stage of the M&A process, with the help of experienced M&A advisors.

Current Trends in Cybersecurity M&A

It’s a turbulent time in the cybersecurity industry, as with tech in general. With mass layoffs, declining company valuations, and a decrease in private equity investments, people are beginning to worry about the future of M&A in this space.

However, current evidence suggests no imminent slowdown in cybersecurity M&A, according to a recent article on darkreading.com. In recent weeks alone, ReliaQuest announced plans to purchase Digital Shadows for $160 million; Netskope acquired WootCloud, and Lookout acquired SaferPass.Nothing to worry about with cybersecurity M&A

“General economic conditions appear to have made investors a bit more cautious, however: Private equity (PE) investments — which accounted for nearly 40% of merger and acquisition activity last year — are down compared with the same period in 2021, as are company valuations overall. Even so, M&A and venture capital activity in the cybersecurity industry remains robust and shows little sign of a major slowdown.” — darkreading.com

Ultimately — while the cybersecurity industry remains in a state of uncertainty, there seems to be no reason for concern when it comes to M&A, for now. As always, it’s best to keep a close eye on how things are moving and pay attention to any warning signs.

Learn from the experts

At BizNexus, our community of M&A advisors can help you through every step of the M&A and exit planning process. They’ve been there, done it, and continue to work with various elements of buying and selling businesses.

Is Biotech the Future of M&A?

Pfizer recently announced plans to acquire Biohaven Pharmaceutical (NASDAQ:BHVN) for $11.6 billion — a 33% premium.

The move raises some interesting questions. Will more pharmaceutical giants start trying to buy biotech companies? Biotech hit the headlines during the COVID-19 crisis as the technology behind many of the vaccines like those by Moderna and Pfizer and has been a topic of much hype and media attention over the last few years.

An article by ETF Database explored this potential new trend.

“Jefferies analyst Michael Yee “calculates that the combined market capitalization of all the biotech stocks valued at under $5 billion is around $350 billion. The cash balance of the top 20 biopharma companies combined, meanwhile, is over $300 billion.” — ETF Database

It’s still early to call, but as biotech becomes more established, and if it keeps grabbing headlines space in the way it has, there’s every chance it could become a fertile area for M&A over the coming years.

Work with the M&A experts

At BizNexus, we connect potential buyers and sellers with our rich community of M&A experts. Our community members have been there before, they know how the industry works, and many of them are involved in ongoing projects. Ask questions, seek advice, and build your knowledge of how to buy a business, how to sell a business, how to find a business broker, and much more.

Outlook 2023, Private assets: three areas of focus in challenging times

“In 2023, private asset investors face a complex mix of challenges and risks,” says Dr. Nils Rode, Chief Investment Officer at Schroders.

The likelihood of a prolonged recession is significant. Inflation is high. Interest rates are rising, while overall debt is elevated. The war in Ukraine continues, as does the resultant energy crisis. Even if these factors disappeared overnight, ongoing issues like social inequality and populism remain.

Nevertheless, private assets are long-term in nature. It’s more appropriate that investors assess the medium-to long-term outlook before making any decisions. Over this longer timeframe, numerous durable, long-term trends mean we remain optimistic.

There are a few potential reasons why someone might consider investing in private assets:

1. Potential for higher returns: Private assets, such as private equity, venture capital, and real estate, can potentially offer higher returns compared to publicly traded assets, such as stocks and bonds. This is because private assets often involve a greater level of risk and uncertainty, and investors may be willing to accept a higher potential return in exchange for that risk.

2. Diversification: Investing in private assets can also help diversify an investment portfolio, as the performance of private assets may not always be correlated with the performance of publicly traded assets. This can potentially help manage risk and increase the overall stability of an investment portfolio.

3. Control and influence: Investing in private assets can also provide investors with more control and influence over the companies in which they invest. For example, an investor in a privately held company may have a say in the company's management and strategic direction.

It's important to note that investing in private assets carries its own set of risks and challenges. Private assets are often less liquid and harder to value than publicly traded assets, and they may be subject to additional regulatory requirements. It's important to carefully consider the potential risks and rewards of investing in private assets before making any investment decisions.

Picking Up the Pieces: The Corporate Carve-Out Opportunity

As deal activity ramped up in the past two years, both buyers and sellers found increasing M&A opportunities in corporate carve-outs.

Dealogic reported that 9,155 carve-out transactions worth $2.3 trillion were announced globally last year, a 67% increase in value over 2020. An expanding economy, rising company valuations and eager private equity buyers looking to make up for lost time contributed to the surge.

A corporate carveout is a process by which a company spins off a subsidiary or division into a separate, independent company. This can be done for a variety of reasons, such as to raise capital, to focus on a specific product or service, or to allow the newly independent company to pursue strategic opportunities that may be outside the scope of the parent company's business.

In a corporate carveout, the parent company typically retains a minority stake in the newly independent company, which can be sold to other investors at a later date. The newly independent company may also be listed on a stock exchange, allowing the public to buy and sell shares in the company.

Corporate carveouts can be complex transactions, involving the transfer of assets, employees, and intellectual property from the parent company to the newly independent company. They may also involve the renegotiation of contracts and the restructuring of debt. Careful planning and execution are critical to ensure that the carveout is successful and benefits both the parent company and the newly independent company.

A corporate carveout is typically done as a means of restructuring the parent company or as part of a divestiture strategy. Corporate carveouts can take a variety of forms, including spin-offs, split-offs, and divestitures.

In a spin-off, a business unit is separated from the parent company and becomes an independent entity, with its own management team, board of directors, and shareholders. A split-off involves the creation of a new company that is owned by the shareholders of the parent company, with the business unit being transferred to the new company. A divestiture involves the sale of a business unit to an external buyer.

Corporate carveouts can be motivated by a number of factors, including the desire to focus on core business operations, to raise capital, to unlock value for shareholders, or to improve operational efficiency. They can also be used to separate businesses that have different growth prospects or that operate in different industries.

Recession Anxiety? Not in the Credit Market

“The corporate debt market is still doing its part to keep America out of a recession,” says Jonathan Levin | Bloomberg.

As economists and yield curve indicators warn about a potential downturn in 2023, the signs of any kind of credit panic remain conspicuously absent from primary issuance markets and corporate spreads. Amazon.com Inc. is among 19 investment-grade companies that sold bonds this week, closing out November at about $104 billion in issuance, according to Bloomberg Intelligence data, in what’s typically one of the last spurts before bankers and investors start checking out for the winter holidays.

UK M&A activity for Q3 at lowest level since 2012

“UK dealmaking experienced its slowest third quarter in a decade, according to an Experian Market IQ report,” says Laurence Kilgannon, Digital News Editor at the Insider Media Limited.

There were 1,357 deals announced - the lowest third quarter total since back in 2012.

In the year to date there have been 4,782 transactions across the UK in the first nine months of the year, down by 14 per cent from the 5,553 deals announced over the corresponding period of 2021.

ANALYSIS: 2023 M&A Market May Reveal a Return to Pre-2021 Levels

The Bloomberg Law 2023 series previews the themes and topics that our legal analysts will be watching closely in 2023. Our Transactional analyses explore the trends and forces shaping key markets of interest in the year ahead.

As we approach 2023, the mergers and acquisitions market continues to be described as “slow” and “uncertain,” and those trends are likely to continue into the new year.

Despite this outlook, the 2023 deal forecast may not be as dreary as some predict. M&A activity in 2021 reached historic levels, and it’s hard to beat records year after year. So 2023—even if slower than 2022—could represent a return to normal in the M&A market.

Private Equity Firms Expect Middle-Market Dominance in 2023 as Monetary Tightening Drives Deal Volumes and Values Down, Yet Fundraising Still Outstrips Pre-Pandemic Levels

Rising leverage costs and volatile valuations driven by economic downturns and increasingly tight monetary policy are the greatest challenges facing the private equity industry, according to the 2023 Dechert Global Private Equity Outlook report.

The US, like other regions in 2022, saw the PE buyout market shift down a gear, with the number of transactions in the region declining by 15% and their aggregate value sinking 43% in the first nine months of the year, compared to the same period in 2021. In the US, the number of buyouts across this period totaled 2,081 with a value of US$333.4bn. Among PE leaders, this trajectory is expected to continue into 2023 and beyond, driven by tightening credit conditions and broader economic dislocation. On the bright side, the market share of buyouts as a proportion of overall M&A activity continues to grow with the percentage share approaching 25% in the Americas through Q3 2022, according to data from Refinitiv.

More than 40% of US respondents said valuation and economic uncertainties were among the top two challenges the PE industry faced. The data, published today, in association with Mergermarket, surveyed more than 100 senior-level executives within PE firms based in North America, EMEA, and Asia-Pacific (APAC). This is Dechert's 5th annual Global Private Equity report.

Despite this, the global volume of transactions remained surprisingly robust. General Partners (GP) remained highly active on all but the largest transactions: "There is always something going on in the middle market, whether it is new platform deals or add-on acquisitions. Even though the amount of capital being invested has fallen, private equity has really demonstrated its resilience," said Dr. Markus P. Bolsinger, co-head of Dechert's global private equity practice and partner in the firm's New York and Munich offices.

M&A Demand Stalls Out In Home Health Care, Declines In Personal Home Care

Coming down from a high the past two years, home-based care M&A saw a bit of slowdown in the third quarter of 2022. That’s according to a recent report from Mertz Taggart.

The report is an overview of the dealmaking activity that took place across home health, home care and hospice in Q3.

The decline in transactions is a result of fewer companies going to market in 2022, compared with 2020 to 2021, Mertz Taggart Managing Partner Cory Mertz said in the report.

“Transaction volume from late 2020 through 2021, relative to historical periods, was up almost 40%,” he said. “This was driven by sellers trying to get their transactions closed before the then-pending capital gains tax rate increase. This never came to fruition, but the threat has loomed since the current administration took office, only subsiding in early 2022.”