M&A Activity is Down, but Opportunities Still Abound
Deal levels (both volume and values) are down in 2023, but clients are still looking ahead for future advantage
July 28, 2023 at 05:08 PM
5 minute read
Depending on whom you ask, M&A activity in 2023 is plummeting, stabilizing, or bouncing back from the bottom. What most everyone does agree on is that M&A activity is not in a good place currently, and certainly nothing like the highs of 2021 and 2022. Pitchbook characterizes deal volume and values for Q2 2023 as significantly lower than Q1, and nowhere near Q2 2022 or 2021. Still, Q2 2023 is on a rough par with the level of Q2 2019, and the preceding years. And while opinions differ on where in the cycle things stand today, almost all agree that M&A activity will eventually recover – late 2023? 2024? – because there are too many demand drivers (strategic realignment driven by new technologies, the amount of dry powder in private equity, the growing data runway that confirms organizations with more active business model strategies perform better over the long term, etc.) favoring continued growth in M&A activity. It's too important a strategic tool to dismiss.
Still, this isn't to say that deal success will be achieved in the same ways as in the past, even the recent past. This is problematic because M&A has been a top revenue generator for many professional services providers in recent years, and yet in 2023, it's not (or at least, not as much as it used to be). There was even a second burst of activity in the first half of 2023 in which serial acquirers of the previous two years took a breath and began more closely integrating their acquisitions, but most agree this wave has run its course. This means that many providers have made huge investments and resource reallocations favoring their M&A and transactions practice areas in recent years, and now those once-lucrative investments have the feel of Coleridge's proverbial albatross. Innovators have taken an asset lifecycle approach and linked their transactions practices with their restructuring groups to balance market cycles, but still – many deals and transaction practices are shedding people nowadays, while other resources are being moved elsewhere. The pain is real.
So given market conditions, where is the service emphasis in M&A today? ALM Pacesetter Research's current conversations indicate that the main pain points in deals today are revenues, core operations, and people. Due diligence was once a discreet part of a transaction process, but today due diligence begins almost at deal inception and has become a single source of truth whose implications last for years afterward. Leading up to the pandemic post-deal services were becoming more common as clients looked for longer-term engagement to ensure deal thesis alignment, but the pendulum has swung back and now clients are far more risk-averse, preferring to catch any surprises early-stage. Indeed, deal timelines accelerated in 2021-2022, but today the emphasis is once again on ensuring the deal thesis values are realized – however long that takes. Investment bankers' role was being squeezed and minimized during the pandemic as data aggregators and alternative models (like SPACs) took over, but the financing challenges of 2023 mean they're brought in earlier in the deal process today, and given long runways to make sure deals are structured optimally. Investors are paying much more attention to the intangibles in deals: employees, IP, ecosystem partnerships, market presence. TSAs are still very necessary, but are increasingly contentious both in creating them and winding them down. (R&W insurance has also become a flash point.) Technologies are important in deals, but only in pragmatic, ROI-grounded ways; clients have little appetite for experimentation.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View All![Russia’s Legal Sector Is Changing As Sanctions Take Their Toll Russia’s Legal Sector Is Changing As Sanctions Take Their Toll](https://images.law.com/cdn-cgi/image/format=auto,fit=contain/https://images.law.com/contrib/content/uploads/sites/378/2023/04/Moscow-Russia-767x633.jpg)
![From Laggards to Tech Founders: Law Firm Innovation Is Flourishing From Laggards to Tech Founders: Law Firm Innovation Is Flourishing](https://images.law.com/cdn-cgi/image/format=auto,fit=contain/https://k2-prod-alm.s3.us-east-1.amazonaws.com/brightspot/63/74/61a893a843c39ae2db900dec4650/ai-machine-learning-767x633.jpg)
From Laggards to Tech Founders: Law Firm Innovation Is Flourishing
![Inside Track: Cooley's Modest Proposal to Make Executives Safer Inside Track: Cooley's Modest Proposal to Make Executives Safer](https://images.law.com/cdn-cgi/image/format=auto,fit=contain/https://k2-prod-alm.s3.us-east-1.amazonaws.com/brightspot/06/70/62de25314643aee1f6d76982802e/2024-12-9-police-responding-to-brian-thompson-shooting-421471145-bloomberg-640x640-yuki-iwamura.jpg)
Inside Track: Cooley's Modest Proposal to Make Executives Safer
![Law School Applications are Up Across the Country. Law Deans Aren't Sure Why Law School Applications are Up Across the Country. Law Deans Aren't Sure Why](https://images.law.com/cdn-cgi/image/format=auto,fit=contain/https://k2-prod-alm.s3.us-east-1.amazonaws.com/brightspot/86/e8/9dbda3ad4adc879d3df85fe04c55/university-michigan-law-767x633.jpg)
Law School Applications are Up Across the Country. Law Deans Aren't Sure Why
6 minute readTrending Stories
- 1On the Move and After Hours: Einhorn Barbarito; Gibbons; Greenbaum Rowe; Pro Bono Partnership
- 2On The Move: Squire Patton Boggs, Akerman Among Four Firms Adding Atlanta Partners
- 3Is the Collateral Order Doctrine About to Have a 'Brat Summer'?
- 4Trump Administration Faces Lawsuit Over USAID Stop-Work Orders
- 5Legaltech Rundown: Davis Wright Tremaine Announces CodeX Partnership, AAA Brings on Maya Markovich as VP, and More
Who Got The Work
J. Brugh Lower of Gibbons has entered an appearance for industrial equipment supplier Devco Corporation in a pending trademark infringement lawsuit. The suit, accusing the defendant of selling knock-off Graco products, was filed Dec. 18 in New Jersey District Court by Rivkin Radler on behalf of Graco Inc. and Graco Minnesota. The case, assigned to U.S. District Judge Zahid N. Quraishi, is 3:24-cv-11294, Graco Inc. et al v. Devco Corporation.
Who Got The Work
Rebecca Maller-Stein and Kent A. Yalowitz of Arnold & Porter Kaye Scholer have entered their appearances for Hanaco Venture Capital and its executives, Lior Prosor and David Frankel, in a pending securities lawsuit. The action, filed on Dec. 24 in New York Southern District Court by Zell, Aron & Co. on behalf of Goldeneye Advisors, accuses the defendants of negligently and fraudulently managing the plaintiff's $1 million investment. The case, assigned to U.S. District Judge Vernon S. Broderick, is 1:24-cv-09918, Goldeneye Advisors, LLC v. Hanaco Venture Capital, Ltd. et al.
Who Got The Work
Attorneys from A&O Shearman has stepped in as defense counsel for Toronto-Dominion Bank and other defendants in a pending securities class action. The suit, filed Dec. 11 in New York Southern District Court by Bleichmar Fonti & Auld, accuses the defendants of concealing the bank's 'pervasive' deficiencies in regards to its compliance with the Bank Secrecy Act and the quality of its anti-money laundering controls. The case, assigned to U.S. District Judge Arun Subramanian, is 1:24-cv-09445, Gonzalez v. The Toronto-Dominion Bank et al.
Who Got The Work
Crown Castle International, a Pennsylvania company providing shared communications infrastructure, has turned to Luke D. Wolf of Gordon Rees Scully Mansukhani to fend off a pending breach-of-contract lawsuit. The court action, filed Nov. 25 in Michigan Eastern District Court by Hooper Hathaway PC on behalf of The Town Residences LLC, accuses Crown Castle of failing to transfer approximately $30,000 in utility payments from T-Mobile in breach of a roof-top lease and assignment agreement. The case, assigned to U.S. District Judge Susan K. Declercq, is 2:24-cv-13131, The Town Residences LLC v. T-Mobile US, Inc. et al.
Who Got The Work
Wilfred P. Coronato and Daniel M. Schwartz of McCarter & English have stepped in as defense counsel to Electrolux Home Products Inc. in a pending product liability lawsuit. The court action, filed Nov. 26 in New York Eastern District Court by Poulos Lopiccolo PC and Nagel Rice LLP on behalf of David Stern, alleges that the defendant's refrigerators’ drawers and shelving repeatedly break and fall apart within months after purchase. The case, assigned to U.S. District Judge Joan M. Azrack, is 2:24-cv-08204, Stern v. Electrolux Home Products, Inc.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250