Jason Brauser and Will Goodling Look at Middle-Market M&A Trends for 2023 and Beyond

In a new article in Law360, corporate partners Jason Brauser and Will Goodling discuss how merger and acquisition activity has trended in the last few years and what they expect for 2024.

In late 2020 and through 2021, M&A activity surged, driven by near-zero interests rates, but it began to slow starting in 2022 due to factors that include rising interest rates and inflation that resulted from the earlier low rates, supply chain uncertainties, wars overseas, and political, regulatory, and legal uncertainty.

According to the authors, 2023 M&A activity has held steady, with negotiating power appearing to have shifted toward buyers, who are becoming more deliberate in performing due diligence and more comfortable with deserting a transaction they might have completed a few years ago.

Looking ahead, the potential for regulatory changes is likely to continue to limit certain types of M&A activity, with the political uncertainty of an election year and ongoing international disputes and degraded relations between nations also factors of concern.

On the plus side, in a recent survey, a majority of economists predict a recession in 2024 is unlikely and inflation will continue to slow, while Federal Reserve projections revealed that officials of the agency anticipate three interest rate cuts in 2024.

Brauser and Goodling conclude: “While economic uncertainty remains, these economic trends suggest that the macroeconomic environment may be more favorable to middle-market M&A activity in 2024 compared to 2023, although not enough for a return to the transaction mania of 2020 and 2021.”