M&A professionals expect fewer deals in 2023

/ 13th January 2023 /

M&A activity in Ireland is expected to soften through 2023 according to a KPMG survey of 150 executives who are involved in corporate deals.

Sixteen percent of M&A professionals expect higher deal volumes in 2023, while 44% believe they will remain broadly stable, and 40% believe they will decrease.

Three out of four respondents anticipate that 2023 will be a buyers’ market bolstered by the expectation that deal multiples will soften.

Following an extended period in which competition drove deal multiples and valuations to historic levels, respondents anticipate value rebasing in 2023.

However, in a positive outlook for deal activity, almost three-quarters of respondents intend to pursue M&A opportunities in 2023, as deal makers capitalise on inorganic growth opportunities.

KPMG Outlook 2023 does no specify who was surveyed for their views.

The survey finds that investors are expected to act opportunistically with anticipated deal valuation declines in some sectors.

Mark Collins, head of deal advisory at KPMG in Ireland, commented: “In spite of economic uncertainty, there is plenty of opportunity for M&A activity in 2023 as market multiples soften.

High quality Irish targets continue to be of interest to both international and Irish investors. Given the macroenvironment, diligence in all its forms will be essential to validating investment returns.”

M&A
deals in 2023 — **Mark Collins**, head of deal advisory at KPMG in Ireland, commented: “In spite of economic uncertainty, there is plenty of opportunity for M&A activity in 2023 as market multiples soften."

David O’Kelly, head of M&A at KPMG, said he expects continued competition for attractive Irish businesses in select sectors such as healthcare and financial services.

“Appetite remains strong from private equity with record levels of dry powder and corporates with strong balance sheets. We continue to see strong competition for targets with resilient business models and high performing management teams.

Survey respondents expect the tech sector (38%) to be most active in 2023, followed by healthcare and pharmaceuticals (25%) and energy/infrastructure (11%).

Half the survey cohort identified availability and cost of financing as the primary obstacle facing deal activity in 2023. Two out of five cited the current inflationary environment as a concern, indicating that macroeconomic trends will be at the forefront of dealmakers’ minds in 2023.

M&A professionals also highlighted the growing importance that IT/operational (13%) and ESG diligence (11%) will play in 2023.