M&A In 2023 - What to Consider and Why?

In order to accelerate growth, many companies consider investors, or a combination of debt and equity financing, to light the fuse for fast expansion. If equity investors are an option, that means giving up a piece of the company, and that’s a complex decision to guess at, given the long-term consequences. Last year was a difficult one for M&A dealmakers with interest rate fluctuations, inflationary pressures and geopolitical instability all affecting deal values and decreasing multiples as the marketplace bounced around after the highs of 2021. 

With investor hunger unabated, even during the tumult of 2022, there are bold moves likely to come in 2023. Just like earthquakes can uncover hidden treasures beneath, the shake-rattle-and-roll of the M&A marketplace can reveal diamonds-in-the-rough, and the savvy players will be actively mining while competitors shy away from unstable ground.

Bain & Company’s Global M&A Report describes the current climate perfectly:

“Experienced dealmakers are familiar with the cyclical nature of the M&A market. Deal values and deal multiples decline as sellers hold back and acquirers lose conviction. As uncertainty impacts both the base business of acquirers and targets, it becomes harder to make decisions about deals. It’s no wonder why many executives lose their appetites for the deal process during turbulent times.”

So, if you’re in the market to invest, merge, restructure or partner as a juggernaut for growth, what should be foremost on your mind? Three considerations spring to the top of the list: fit, balance and tolerance.


Determining what the needs are is step one, and then finding a strategic partner that can fulfill those needs while maintaining the solid foundations of the existing business performance is easier said than done. Companies that need cash to accelerate growth should be on the lookout for partners that operate in a similar model, with experience in growth and expansion that can share insights and support navigation in challenging landscapes. Strategic partners can be an ideal fit if the models match up, especially if new skill sets and talent can be infused into both partners’ businesses. If needed, strategic partners might be able to bridge gaps and fill “white space” for businesses in the forms of new geographic distribution, new customers and more.

Companies looking for investment should consider the track record of the potential investor: what success have they experienced, what lessons have been learned, what would they do differently with new partners? Like a critical job interview, where the interviewee is examining the employer with equal scrutiny as the employer views the job candidate, strategic partner exploration goes both ways. 

When planning to integrate partners on both sides of the M&A equation, fit becomes even more critical – as you’re now talking about culture and approach.  There’s usually a large focus on how well the partners can integrate operations in the early stages of consideration, but it’s a broad-based inquiry at best. Focusing on the “single points of failure”, which are critical issues and areas that can disrupt the normal flow of business operations (i.e. decision making, mission, etc.) that are the squeaky wheels needing the oil to ensure that the fit between partners is a good one.


There’s a give-and-take on both sides of any M&A partnership.  A higher valuation with better terms might be weighed against speed-to-market and instant efficiencies. Deals that are rougher around the edges might need to be considered versus a deadline-driven competitive bidding war. 

Many private equity firms are ready to take advantage of turbulent economic environments, and they have the cash and the hunger (and the willingness to pay for) to acquire the right assets at the right time.

Companies who need a resource infusion (cash, expertise, connections, etc.) often have to measure other factors like how much equity to give up for the needed investment. Many investment targets hesitate during market downturns as they don’t want to “sell low,” but the hesitation comes at a cost. If assets are underperforming, or losing money, selling off key business assets can help fund new segments that show more promise, plus it frees up intellectual attention from company leadership to focus on “the new.”


Investors are looking for growth pathways, and some are shorter pathways with more risks, while others are longer and flatter. Solid return on capital and maximizing profitability is usually the top priority. The length of time and effort required to see those returns is where patience and tolerance enter the conversation. When seeking a strategic investment partner, it’s important to find out if decisions around the use of funds and the pursuit of maximizing returns take precedence over a repayment schedule. 

On the target side, you have to tolerate more voices in the room than you have had before.  Investors become your partners in more ways than just financially, they will provide input on key decisions, and help guide the business towards growth goals with new standards for governance, visibility and accountability. That kind of oversight isn’t for everyone.

For both deal makers and investment targets, you should know going in what you need, what you want, and what you can do without if necessary. If those elements match up across the table, you might have a deal that can succeed for all concerned.


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