Despite the ongoing challenges in the M&A market— interest rates, inflation, supply chain challenges, geopolitical conflicts, and less available debt financing—Advisors are witnessing glimmers of hope that could mark a positive turning point in dealmaking for the upcoming year.
Private equity firms’ increasing pressure by Limited Partners to exit long-held portfolio companies and return capital, along with the alignment of seller expectations, have been two indicators of a potential turn in the M&A market. Additionally, companies with strong cash flow have continued to push through market conditions to go after significant targets.
So, how can businesses prepare for 2024 and leverage M&A to make strategic business moves?
Businesses with healthy cash flows and strong growth prospects will continue to showcase long-term value to buyers. Additionally, strong leadership, demonstration of resiliency, and clear ethical values will be more attractive for business owners looking to sell.
The ever-increasing digital environment of businesses is expected to be more critical as we enter 2024. More and more companies must realize that their competitiveness hinges on their ability to embrace and implement technology into their business models. Strong digital capabilities will be a strategic advantage for those looking to sell or buy in the future.
Corporate and private equity can leverage middle-market deals to transform their business models. Smaller deals provide more advantages in the current financial and regulatory environment, making them even more achievable while also offering great opportunities for CEOs and business leaders looking to grow.
As the market and trends continue to shift entering 2024, it’s imperative for business leaders to partner with an M&A Advisor to help navigate the complexities of a transaction and ensure they receive the most value for their businesses. Reach out to our Aberdeen Team for a free consultation and to learn more about how we can help.