Bain & Company's sixth annual Global M&A Report shows frequent acquirers will reap the benefits of the rebound, but they should prepare for longer, more unpredictable regulatory approval processes.
The total M&A market dropped 15%, to $3.2 trillion, the lowest level in a decade, as dealmakers grappling with high interest rates, regulatory scrutiny, and mixed macroeconomic signals had to be more selective about which deals to pursue in 2023. But the biggest obstacle was the gap between valuations. At 10.1 times, overall strategic deal multiples were the lowest in 15 years. Looking ahead, many of the assets that didn't come to market last year will fuel active deal making in 2024. These are among the findings of Bain & Company's sixth annual Global M&A Report.
"The drop in deal multiples led to a wait-and-see atmosphere in 2023, with many sellers hesitant to come to the table at a market bottom," said Les Baird, partner and head of Bain & Company's global M&A and Divestitures practice. "This year, buyers have their eyes on a growing backlog of deals. A need for liquidity will motivate some sellers, while others will divest assets while reshaping their portfolios. As interest rates stabilize, we expect the logjam in M&A markets will break. When it does, competition for assets will be significant. Winning buyers will use diligence to uncover a differentiated view on revenue and cost synergies and win the deal."
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