4 macro trends that will impact deals in 2023

Looking towards the 2023 M&A landscape, let’s start by acknowledging that 2021 was a year of roller coaster highs with record-breaking deal numbers and total value caused partly by pent-up demand from a backlog of deals put on hold during the early pandemic. And 2022 could be viewed as a year of normalization — a market correction to bring deal numbers back in line with pre-pandemic levels. However, the headwinds felt in 2022, namely geopolitical unrest, a looming recession and rising interest rates, should have had a more damaging effect on deal activity. The fact that deals closed as they did indicate a buoyant market and hope for continued resilience into the new year.

Moving into at least the first half of 2023, we see several trends that started in 2022 that are continuing to gain momentum and will continue to inform how M&A leaders make decisions about acquisitions, carve-outs and divestitures.

The FOMO is real

It can sometimes seem foolhardy to make M&A predictions during the current economic climate where many external factors influence buyer behavior — varying by geography, industry and deal size. However, we take comfort that M&A is cyclical and whilst it flourishes in a confident market, the opportunistic buyers remain active even in the downturns. The FOMO (Fear of Missing Out) factor is real in M&A and can create a domino effect. Therefore, as the markets adjust to continuing instability, potentially higher interest rates and inflation, we are confident that M&A will remain a priority on the boardroom agenda and dealmakers with technology needs and a sound deal justification, such as bringing parts and components closer to home, will be the winners in 2023.