As it turns out, there’s no better lens through which to examine the effects of the current economic environment than US middle market M&A activity. As we heard last week from five top investment bankers, a wide range of indicators – including volume, valuations, financing and sector rotation – flashed across the market in the wake of interest rate hikes, public asset volatility, and economic headwinds.
Before digging into panel’s expectations for this year, let’s reprise 2022 highlights. Global M&A volume was down 35% and 11% by deal count, and in the US 41% and 17%, respectively. Sponsored deal flow was off 33% for both volume and numbers, but ahead of 2020 numbers.
The unraveling of deal momentum began as early as last February. Though market “choppiness” didn’t take hold until the second quarter when “the bottom fell out of the middle market.” September witnessed a comeback with deals moving forward in November. Still, buyers took every opportunity to re-trade deals.