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M&A Report - Mid-Year 2023

In our mid-year report, we analyze the factors behind the slowdown in M&A activity and the impact on valuations. Recent changes in economic conditions have given rise to a new normal, causing concerns about a subdued outlook for the years ahead.

M&A Trends at a Glance

For the first half of 2023, M&A valuations rebounded slightly with a reset of 4% after a 13% decline in 2022.

The total M&A deal count fell by 23% from 10,003 in 2022-Q1 to 7,738 M&A deals in 2023-Q1.The slowdown significantly impacted the number of mega deals (over $1 billion), with the volume declining by 45% to total 79 versus 132 in 2022-Q1.

Energy, industrials, and tech industries are gaining momentum despite the slowdown.

Cross-border M&A is on the rise for growth-focused and cost-driven companies: Pitchbook reported a record $1.57 trillion in cross-border transactions in 2022.

The recent US government legislative changes to the Defense Production Act of 1950 are negatively impacting foreign investments in the United States.

Investors are favoring companies with proven profitability and efficient capital utilization. Demonstrating successful capital usage is crucial to attracting investment interest.

EBITDA Margins: From Peak to Trough?

EBITDA multiples experienced a sharp decline starting in Q1 of 2022, which seems to have stabilized in Q1 of 2023. The rising cost of debt during the same period directly impacted valuation metrics. EBITDA margins peaked at 25% of Revenue in 2022-Q1, the highest recorded figure during the analyzed periods.This coincided with the highest inflation rate recorded in 40 years.Whether we will see a W-shape correction remains to be confirmed.

EBITDA Multiples at All-Time Median of 4.2x

The median EBITDA multiple across all industry sectors for the period stood at 4.2x, in line with historical average.The IT sector boasted an all-time high EBITDA multiple of 11.1x, marking a strong entry by Private Equity investors into the tech market following a slump in VC capital. Conversely, the accommodation and food service sectors reached an all-time low at 2.6x and 3.1x, respectively.

Top 5 Articles

March 21, 2023 – McKinsey Global Private Markets Review: Private markets turn down the volume >>>

May 16, 2023 – Signs of optimism in the M&A market >>>

May 19, 2023 – What strategies were being used to stay deal ready in the turbulent waters of Q1? >>>

Jun 3, 2023 – Global mergers and acquisitions plunge in second quarter, dealmakers

see green shoots >>>

June 16, 2023 – PWC’s Global M&A Industry Trends: 2023 Mid-Year Update >>>

Announcing the Opening of Our Pacific Northwest Division

Pacifica Advisors is pleased to announce the opening of an office in the Pacific Northwest. Over the last decade, Austin Masket built an impressive track record exceeding $1 billion in capital markets advisory services to lower middle market businesses, commercial real estate and venture capital investors. Austin's experience spans various industries, and he maintains personal connections with top players nationwide. Austin is an avid snowboarder and outdoors enthusiast, and looks forward to meeting you out on the slopes.

Austin Masket - Senior Associate

Phone: (323) 578-4948

About Pacifica Advisors

Pacifica Advisors is a cross-border mergers and acquisitions advisory firm serving small to medium-sized businesses with $1.5 to $25 million in EBITDA across the Western US & Mexico. Our M&A services include sell-side representation, buy-side advisory, capital markets, and business valuation.

Visit us at for a FREE opinion of value, or to learn how we can help get your business ready for a successful sale.

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