IMAP partners closed 162 M&A deals worth more than $21 billion during the Q1-Q3 2022 period. Challenging macroeconomic conditions, including high and persistent inflation and the threat of recession have dominated financial headlines throughout the year. However, the mid-market M&A scene is still holding up in spite of significant stock market declines, with no sign of the major slowdown in deal activity predicted by many just a few months ago. At the same time, there has been a clear transition towards more cautious financing, circumspect investor approaches, and demand for high quality assets, with a particular strategic emphasis on companies with sustainable growth models that should perform well in an economic slowdown. Another aspect of these shifted market dynamics is that financially sound strategic buyers are well positioned to pursue buy-and-build transactions that strengthen their position. Financial players and PE groups may have a tougher time moving forward on deals because of the decreased availability of cheap leveraged financing.
Technology, Industrials, Business Services, and Healthcare were the most active sectors for IMAP in Q1-Q3, accounting for nearly 50% of total deal volume. Significant IMAP deal activity was also registered in the Consumer & Retail, Food & Beverage, and Transportation & Logistics sectors. Going forward, IMAP dealmakers have signaled that these are the sectors likely to account for the bulk of growth in the M&A mid-market. Roughly 24% of IMAP’s transactions so far this year were cross-border, which is a little lower than previous periods and probably reflects growing investor uncertainty surrounding the international environment. However, the relative decline of major currencies versus the US dollar may encourage international buyers to pursue inbound transactions in foreign markets.
Jurgis Oniunas, IMAP Chairman, commented: “The S&P 500 Index is down about 25% from its peak at the beginning of the year, the Nasdaq is down around 35%, major profit warnings are coming every day from public companies in all sectors, and yet, IMAP partners continue to perform – maybe not at the same pace as the bubble of 2021, but in line with previous years. This shows the resilience of the mid-cap market and is a tribute to the men and women that have built these companies and are the backbone of economies around the world.”
Read the full summary, including IMAP Partner Local M&A Insights in the report below.
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