Today’s M&A landscape – Could 2023 be the year to sell your business?

After a record-breaking year of Mergers & Acquisitions (M&A) activity in 2021, deal-making activity remained strong again in 2022. In fact, 2022 continued with the run of record-breaking M&A activity and valuations globally, and the impact was mirrored locally. Despite increasing inflation, rising recession concerns, the war in Ukraine, and an overall apprehension about where the economy was heading, M&A continues to make a solid entrance into 2023.

Director of Business Development in Paramax Corporation’s Rochester office, Sam Messina, remarks: “As we embark into this new year, many of the larger-economic insecurities remain present. Although the winds of uncertainty are certainly strong, the M&A landscape continues to plot its course forward.”

A survey of 300 M&A firms revealed that 73% of participants expect M&A activities to actually increase in 2023, with 27% of them expecting a significant increase.*

Paramax also continues to be optimistic about M&A:

Companies continue to look for growth through “buy and build” strategies, acquiring businesses through strategic acquisitions.

There is a substantial amount of capital in the market – ready to be deployed – with investment time limits that need to be met, leading to a significant amount of “dry powder.”  Dry powder is the idle cash in the hands of private equity and venture capital firms that remains to be deployed and invested and is currently sitting in reserves. There are currently record levels of capital sitting on the sidelines for the worldwide private equity market — nearly $2 trillion as of December 2022. This amount represents a 23% year-over-year increase from the $1.6 trillion in worldwide private equity dry powder as reported in December 2021. A large percentage of investors expect deal activity in 2023 to either remain at the same level as last year or increase, and they do not anticipate a slowdown.

For middle market and lower middle market business owners considering a sale while conditions are still generally favorable, 2023 could be an optimal time frame. The foundation of the economy is not made up of giant, billion-dollar companies — it is made up of those in the middle and lower middle markets. Middle market and lower middle market businesses remain a major source of deal targets for both strategic and financial buyers. Definitions vary, but the middle market is generally defined as deals valued below $1 billion and the lower middle market are those below $500 million in valuation.

Paramax Corporation is a boutique investment banking firm headquartered in Western New York, with offices in Rochester and Buffalo. Paramax designs and executes a professional process that inspires high valuations from a pool of strategically invited buyers. Paramax has the knowledge and expertise to guide each transaction through the unique maze of challenges it will inevitably face, ensuring a higher probability of closing at an optimal price. Their well-defined procedures include frequent and precise communication with their clients and other key advisors.

Paramax has advised on more than 400 closed transactions for public and privately held companies around the world, generally ranging from $10 million to $1 billion in enterprise value. Our Paramax team has produced optimal value, identified strategic buyers and opportunities, and negotiated terms that our clients never thought were possible. Our managing directors have significant operating experience in both publicly traded and privately held companies in addition to extensive transactional experience.

Russell D’Alba is a FINRA-licensed Broker/Dealer principal who has represented family businesses as well as Fortune 500 companies in strategic sale transactions in the United States and abroad. He holds expertise in business and transactional negotiations and is a Certified Public Accountant (CPA) in New York.

Paramax is a member of Globalscope Partners Limited, an exclusive, worldwide network of best-in-class M&A advisors who collaborate to support clients in international cross-border investment banking transactions. Paramax Corporation conducts securities transactions through its wholly owned subsidiary, Paramax Securities, LLC, an SEC registered, FINRA-licensed Broker/Dealer.

*Source: *Intralinks 2023 North America M&A Dealmakers Sentiment Report