“It’s back to business for the people who advise mid-sized companies on mergers and acquisitions.”

Firmex data as reported in its Deal Flow Bulletin Q1 2023 drives their optimism. Firmex projects that North American deal announcements in the first quarter of 2023 will be 17% higher than in the final quarter of 2022. The majority of advisors surveyed say they are feeling positive about the market heading into 2023. And nearly six out of 10 say they expect to handle more deals this year than they did in 2022.

The organization’s newly developed artificial intelligence model for forecasting future deal flow is based on the creation and use of virtual deal rooms, combined with other macroeconomic data.

The Takeaways

  • Middle-market merger advisors report they had a good year in 2022, but not quite as good as 2021. Four in 10 said their volume last year was better than average, while only three in 10 said it was below average.
  • 58% of advisors expect volume to increase in 2023, with only 17% saying it will fall.
  • Overall, advisor sentiments are favorable. 53% of the advisors describe their feeling about the market as positive, with only 13% expressing negative sentiment.
  • However, 43% of advisors predict that valuations will fall in 2023, while 21% believe they will rise.
  • Healthcare deals are forecasted to increase in 2023, according to 60% of advisors active in the sector. Last year, only 23% expected more healthcare activity.
  • Three out of five advisors predict that the number of sellers in the market would increase in 2023.
  • Merger advisors completed 63% of the deals they started working on in 2022, up slightly from 61% in 2021. Most say their success rate will increase in 2023.
  • Half of the advisors said that access to financing would be a significant challenge as they try to close deals this year, a sharp increase from last year.

“The pause is over, and the market has adjusted to the new reality. Interest rates will continue to rise, advisors say, and that will lower the prices buyers can pay. All the forces behind the surge in M&A activity in recent years are again driving deals, albeit using the new valuation formula,” according to the Firmex report.

  • Aging baby boomers are still fueling the number of businesses that will be on the market. One advisor reports: “Many more Baby Boomer Sellers are available to exit businesses and sell. At least 50% of my current sellers are family operated businesses where the owner, a Baby Boomer, is looking to retire or exit."
  • Private equity firms still have a lot of money to invest. And the economies of scale still apply.

“Overall, I feel that sellers became more realistic in 2022 and that trend will continue. Similarly, the headlines and interest rates weeded out a lot of buyers that shouldn't have been in the market in the first place," one M&A advisor suggests.

The Bottom Line

Despite the uncertainty that dominates the headlines and higher interest rates, the M&A outlook for the near future looks positive—especially for solid, high-quality businesses. As one advisor says:

"If your business is doing well, 2023 is a great time to sell. Buyer demand is still very high with plenty of capital waiting to be deployed, readily available financing, and a growing number of corporate refugees who would like to have more control over their destiny by owning their own business. Supply of quality businesses for sale is expected to be down in 2023 due to business owners holding off selling due to performance issues or the perceived notion that it is not a good time to sell. This makes a perfect opportunity for business owners who are doing well to sell.”

There will always be external factors, beyond our control, that can impact business value and the timing of your exit, but there are actions you can take now on the factors that you can control. Another advisor recommends: “Clean up your financials. Work on eliminating personal expenses charged to the company. Build up your management team and work on removing yourself from the business. Buyers are not buying you, they are buying your business.”

Get educated on all the things you should do in advance to ensure that you can preserve the continuity of your company, maximize business value, and achieve your exit goals.

Contact us if you’re thinking about selling or transitioning out of your business in 2023!


Material discussed in this communication is meant to provide general information and should not be acted on without obtaining professional advice tailored to you or your company’s individual and specific needs. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used by any person or entity, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. This information is for general guidance only and is not a substitute for professional advice. Information presented is believed to be factual and up-to-date; however, BTA makes no guarantee as to accuracy, completeness, suitability, or validity of any information within this communication and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages from its display or use. Any forward-looking statements are believed to be reasonable; however, BTA gives no assurance that such expectations will prove to be correct.

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