Capstone Partners & IMAP Release 2023-2024 Trends in Global M&A Research Survey:

Rhea-AI Summary

Capstone Partners and IMAP released their annual Trends in Global M&A Survey Report, revealing that middle market M&A activity outperformed the broader market in 2023. Despite an overall decline in M&A volume, 51% of advisors anticipate an increase in deal flow for 2024. The report also highlights the top M&A target characteristics, the strength of the private equity community, and the expected compression of purchase multiples in 2024.

Middle Market M&A Outperforms Broader Market Despite Global Deal Flow Decline

BOSTON, Jan. 30, 2024 /PRNewswire/ -- Capstone Partners, a leading middle market investment banking firm, in conjunction with its partner IMAP, a leading global investment banking advisory firm, released its annual Trends in Global M&A Survey Report, with insights from M&A advisors across the world. This report combines Capstone's in-depth investment banking knowledge with proprietary data obtained from 100 participating IMAP M&A advisors across 65 countries. Conducted between September 26, 2023, and October 24, 2023, the survey captures sentiment at a pivotal moment in global middle market M&A, providing insight into M&A market activity throughout 2023 and forecasts for deal making conditions in 2024.

Key Findings:

• Despite a decline in overall M&A volume, middle market deal activity continued to outperform the broader market in 2023, as identified by 57% of total investment bankers surveyed.
   
• As M&A activity likely neared or reached its trough in 2023, the majority (51%) of total advisors surveyed anticipate 2024 deal flow to increase. However, the lion's share (47%) of those respondents expect a moderate increase in 2024, indicating that a full M&A volume rebound may not materialize over the next 12 months.
   
• Financial criteria comprised the top three most important M&A target characteristics for acquirers in 2023, as noted by total advisers surveyed. This includes strong margin profiles (71% of advisors), recurring revenue (63%), and defensible cashflow (47%).
   
• More than 90% of advisors in each industry forecasted an increase or consistent amount of private equity activity in their respective industries, illustrating the strength of the sponsor community across a variety of markets.
   
• M&A purchase multiples are expected to remain compressed in 2024, with 67% of advisors surveyed anticipating little to no change in valuations compared to 2023, likely driven by market/economic uncertainty and a lack of motivated acquirers.
   
• Half of advisors projected businesses owner retirement to continue to be the driving force behind sell-side mandates in 2024, followed by an owner seeking liquidity.
   
• To achieve a successful M&A deal for a seller, nearly all (95%) advisors pointed to setting a realistic deal valuation as very or somewhat important. This aligns with the primary deal closing hinderance advisors faced throughout 2023, as 58% experienced excessive valuation expectations from sellers.

Through this research, Capstone Partners and IMAP have tracked notable impacts on the global M&A market, current economic environment, as well as M&A advisors' expectations on pricing trends and regional risks and opportunities moving forward into 2024. The report also provides an analysis of sell-side M&A considerations for middle market business owners looking to pursue a liquidity event.

To access the full report including a breakout of the results by industry and region, click here.

ABOUT CAPSTONE PARTNERS

For over 20 years, the firm has been a trusted advisor to leading middle market companies, offering a fully integrated range of investment banking and financial advisory services uniquely tailored to help owners, investors, and creditors through each stage of the company's lifecycle.  Capstone's services include M&A advisory, debt and equity placement, corporate restructuring, special situations, valuation and fairness opinions and financial advisory services.  Headquartered in Boston, the firm has 175+ professionals in multiple offices across the U.S. With 12 dedicated industry groups, Capstone delivers sector-specific expertise through large, cross-functional teams.  Capstone is a subsidiary of Huntington Bancshares Incorporated (NASDAQ:HBAN).  For more information, visit www.capstonepartners.com.

ABOUT IMAP

IMAP is an International Mergers and Acquisitions Partnership with a 50-year track record, more than 450 M&A professionals worldwide and a presence in 41 countries. IMAP has closed over 2,200 transactions valued at $130bn in the last 10 years and is consistently ranked in the world's Top 10 M&A advisors (Refinitiv) for mid-market transactions. For more information, visit www.imap.com.

For More Information Contact:

Sarah Doherty
Capstone Partners
Director of Market Intelligence
617-619-3310
sdoherty@capstonepartners.com

Claire Smedley
IMAP
Head of Communications & PR
+34 659 231 402
cs@imap.com

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SOURCE Capstone Partners

FAQ

What are the key findings of the Trends in Global M&A Survey Report released by Capstone Partners and IMAP?

The report reveals that middle market M&A activity outperformed the broader market in 2023, and 51% of advisors anticipate an increase in deal flow for 2024.

What are the top three most important M&A target characteristics for acquirers in 2023?

The top three characteristics are strong margin profiles, recurring revenue, and defensible cashflow.

What percentage of advisors anticipate little to no change in M&A purchase multiples in 2024?

67% of advisors surveyed anticipate little to no change in valuations compared to 2023.

What is the driving force behind sell-side mandates in 2024 according to the report?

Business owner retirement and owner seeking liquidity are the driving forces behind sell-side mandates in 2024.

What is considered very or somewhat important to achieve a successful M&A deal for a seller according to the report?

Setting a realistic deal valuation is considered very or somewhat important by 95% of advisors.

What hindrance did advisors face throughout 2023 according to the report?

58% experienced excessive valuation expectations from sellers as the primary deal closing hindrance.