November 14, 2022

M&A Outlook: If You’re Liquid, the Glass is Half Full

According to Dykema’s “18th Annual M&A Outlook Survey,” dealmakers aren’t quite as downbeat about the M&A climate over the next 12 months as you might expect given the gloomy 2023 forecasts we’ve seen. In fact, 65% of the executives and financial advisors surveyed expect the U.S. M&A market to strengthen in the next 12 months. But this excerpt from the survey says that in the current environment, buyers with plenty of dry powder are likely to be the ones getting deals done:

Dealmakers named rising interest rates, economic conditions, and growing inflationary pressure as the top deterrents to M&A activity—while citing the financial markets, economic conditions, and rising interest rates as its biggest drivers. This suggests we may be entering a market of haves and have-nots, in which buyers with a large amount of liquidity—and consequently, no need to borrow at high interest rates—expect to take advantage of buying opportunities and close more deals in the coming year. In contrast, buyers who have routinely relied on banks to finance a large percentage of their acquisitions are anticipating greater roadblocks to funding their deals.

John Jenkins