IMAP dealmakers closed 154 M&A deals around the world worth more than $29 billion during the Q1-Q3 period. Improvements in market conditions and increased confidence observed at the beginning of the year have been offset by other factors, most notably tight financing and a lack of visibility around the timing of interest rate cuts. As a result, the M&A market has not yet emerged from what is proving to be an unusually prolonged downcycle. Transaction activity hit a notable peak in 2021 as the market rebounded from the effects of the pandemic in 2020, but momentum has largely stalled since then. A tight US election race, uncertainty about the health of major world economies and an increased level of geo-political tension continue to weigh on M&A activity.
With expected lower interest rates and borrowing costs not only in the US but also in Europe, confidence is expected to increase going forward among previously hesitant owners of private mid-sized companies and bring financial players off the sidelines in search for opportunities to deploy their record amounts of unspent capital. Moreover, many of the fundamental factors for deal activity are already in place: strong corporate profits, an aging owner base looking for exits, an ongoing move towards market efficiencies and consolidation, and the adoption of new technologies. IMAP advisors are reporting strong deal pipelines and looking forward to increased deal activity in the short to midterm.
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