Key Themes Driving M&A

Against a shifting macroeconomic backdrop, M&A activity moderated in 2022 compared to a record-setting 2021. However, it continued to be very active overall, and heading into 2023 the fundamentals of the M&A market remain in place even amid economic uncertainty.

While exits have slowed year over year, both buyers and private lenders have capital to deploy. Across the eight industries we cover, buyers are prioritizing top-quality companies with resilient business models that demonstrate recession resistance, revenue visibility, strong cash flow and clean earnings, and multiple growth levers. Our teams report especially strong buyer interest in relatively smaller, tuck-in acquisitions that complement existing platforms and provide concrete value-creation opportunities.

Buyer interest and specific company differentiators vary from industry to industry, but several important themes are shared:

• Companies aligned with major global trends that transcend economic conditions are high on the list: healthcare, pharma services and medical devices, for example, as well as consumer services and staples, third-party logistics and supply chain technology, and defense companies focused on the shifting global threat environment.

• Businesses that help companies increase efficiency and performance with technology are in demand, whether they specialize in software, automation, or IT services and consulting.

• Sustainability remains an important long-term theme as well, driving buyer interest in a wide range of businesses: renewable energy specialists; environmentally friendlier packaging and building products; test, inspection, compliance and certification; and more.

• Infrastructure investors continue to be active, expanding their aperture beyond roads and utilities, competing for a growing range of businesses with steady growth, reliable revenue, and clear visibility into future earnings.

These are just a sampling of the relevant trends the Harris Williams team discusses in each industry-specific article here. Overall, we are confident that demand for high-quality companies in resilient sectors will remain strong in the months ahead. As we have seen before, dynamic environments can create challenges, but also provide opportunities for agile, growth-focused organizations. We also believe that the many entrepreneurial, innovative, and high-performing businesses Harris Williams represents will be met with robust interest as they bring their differentiated business models to market.

Most importantly, the Harris Williams team looks forward to the rich variety of engagements that lie ahead, and we are deeply grateful for the new and established relationships that make our work so rewarding.