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Our Crystal Ball: M&A Predictions for 2024

We hope your New Year is off to a great start. Stepping into the new year, the Mergers & Acquisitions (M&A) landscape for Middle Market Companies (<$300M Transaction Value) in the United States is poised for significant shifts and exciting developments. Today, we bring you our insights, predictions, and areas to watch in 2024.


Interest rates remain high compared to what we have seen in the last decade with SOFR hovering around 5.30% and Prime sitting at 8.50%. The Fed has indicated rate increases are on hold for now, but rates are likely to remain higher for longer. Higher rates for longer is not ideal but the pause allows business owners to catch their breath and adjust to this new environment. In 2023, Middle Market Transaction Volume (Deal Count) was down about 35% and Total Transaction Value was down approximately 40%. Additionally, in 2023, the average Middle Market Transaction Value was lower at $42M, compared to $55M shown in 2022.


While 2023 was a down year for much of the M&A Market, there are signs 2024 is looking up with Private Equity Add-On Activity increasing, PE firms holding record amounts of dry powder, Strategic Acquirers maintaining healthy Balance Sheets, and demand remaining strong for well run, quality companies.


Below are a few areas to watch in 2024.

U.S. Consumer

With many predicting an imminent recession, both Strategic Buyers and Private Equity Buyers are hesitant to expand their exposure to discretionary consumer spending as it will likely be negatively impacted by a recession, regardless of its severity. While consumer spending held constant throughout 2023, there are concerns if that level of spending can be sustained into 2024 with record credit card debt and continued concerns around inflation. Businesses that are heavily exposed to discretionary consumer spending will likely continue to see lower M&A volume as these concerns persist.


Transportation & Logistics

The Transportation and Logistics (T&L) sectors experienced a particularly tough 2023 with transaction volume falling 82% and 33%, respectively. Unlike other sectors, Strategic Investors dominated by making 80% of all acquisitions. The transaction decrease was in-line with the “freight recession” that was seen in 2023 and will likely continue into early 2024 as inventories and supply chains stabilize. As stabilization continues, the market for T&L providers, particularly those using tech solutions, will rebound, although a sustained rebound will take time.

Healthcare Services

Physician Practice Management (PPM) acquisition activity held steady at approximately 11% of all Private Equity Transactions, however total deal count was down in 2023. Appetite for consolidation is rebounding as health systems are unlikely to submit competitive bids, aging Physicians continue to look for exit plans and younger Physicians, burdened with student loans, are more inclined to take the employment route vs. owning their own practice. Private Equity Platforms have advanced into nearly every specialty, with particular interest on specialties that cater to an aging population (Cardiovascular, Oncology, Urology, Vision) and the specialties that help us stay young (Dermatology, Med Spa, Plastics, Reproductive). Additionally, with Payors increasingly paying for “Value” we should expect increased interest in Providers that provide holistic value-based preventative care.

Industrials & Infrastructure

While the $550 Billion in new federal spending from the 2021 Infrastructure and Jobs Act has yet to have a meaningful impact on the economy, the funds have begun flowing and will only increase over the next three years. With that level of spending, businesses that directly or indirectly touch these large projects are poised to benefit and remain attractive to acquirers.

Strategic Buyers vs Private Equity

Historically, Strategic Buyers have been willing to pay an additional 1.5 turn of EBITDA in order to win deals, compared to a PE buyer. In 2022, a convergence began with Strategic Buyers lowering their EBITDA multiple and PE buyers increasing their bids to be nearly even. That convergence held steady in 2023 but that is unlikely to hold true in 2024 as the market has stabilized and both buyer types have capital they are itching to deploy. While PE firms still hold just over $1 Trillion of dry powder, we believe Strategic Buyers will return to offering a strategic premium as they have less stringent investment mandates and are able to achieve greater synergies once a transaction is completed.

Private Equity Exits

Consistent with total transaction activity, Private Equity firms exited approximately 30% fewer holdings than in 2022. Generally, PE sellers are able to time their exits to take advantage of opportunities as they arise, but their capital is normally time limited. With 2023 being a down year and many funds approaching the end of their lifecycles, 2024 will hold more traditional exits along with an increase of continuation funds if the original fund isn’t able to garner an acceptable exit price.


In Conclusion

This year will likely be the year of the haves and have nots with certain sectors seeing increased deal activity and others remaining lower in volume and valuation. Industries that have resilient recurring revenues and are not impacted by discretionary spending, will see a rebound, however we do not see a return to the record valuations and volume seen in 2021. Let us know what you think will happen this year.


In 2024, we plan to begin distributing quarterly industry reports providing in-depth coverage of M&A activity in those select industries. If there is a particular industry you’d like to see, please let us know – we’d love to help. We wish you a prosperous and successful year ahead!


At Seacap, we help business owners, and their advisors, successfully navigate mergers and acquisitions, business & healthcare valuations, and a variety of other strategic situations to maximize value when the owner is ready for the next phase of the business’ lifecycle.


Please reach out when you are ready to have a confidential conversation.


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