The year ahead may be a good one for M&A

For cash-flush companies that move quickly, 2023 could be a good year to use mergers and acquisitions to accelerate growth and transformation, according to PwC’s US Deals 2023 outlook.

The M&A market is particularly attractive this year because business valuations dropped in 2022, making acquisition targets more affordable. In addition, a strong US dollar makes foreign companies a better buy, and a steep drop in IPOs in 2022 expands the pool of potential unicorns looking for a quicker exit, the study finds.

These conditions give well-positioned companies with strong balance sheets the opportunity to quickly build resilience, navigate uncertainty, and address talent challenges, John Potter, PwC partner and US deals sector leader, said in a webcast last week.

“M&A is still a critical tool for executives as they look at how to drive their medium and long-term growth and accelerate the transformation,” Potter said. “Whether it’s changing our supply chain, adopting a new go-to-market approach or adding capabilities…the fastest way to transform a business begins through M&A.”

But to get the most out of M&A this year, businesses will have to act quickly in both acquiring companies and creating value post-acquisition, according to PwC. That means ensuring that the deal aligns with the strategic goals of the organization, putting a post-merger integration plan together, and having a strategy for retaining key talent.

PwC expects 2023 to be a strong year for M&A—especially the second half—as it expects macroeconomic conditions to improve, after an active dealmaking year in 2022.—DA