Bulletin Trends and Highlights
- Merger advisors are more optimistic about the pace of their business than they have been since the beginning of 2022. In our October 2023 survey, 59% of advisors expect deal volume to increase over the next three months, a big jump from 42% predicting an uptick in volume in the July survey.
- A plurality (40%) of advisors said their volume increased in the third quarter, while a quarter said their business slowed.
- The factors that are most encouraging dealmaking are the profitability and growth of sellers and the state of the labor market.
- The number of advisors who predict that deal valuations will fall (42%) is the lowest in 18 months, and those who expect valuations to increase (24%) is the highest it’s been in the same period.
- There is a growing use of earnouts and other contingent compensation in deal structures. In this survey, 55% of advisors said these terms have become more common.
A New Forecast for Deal Volumes
The Firmex Deal Flow Bulletin uses a machine learning model to forecast the volume of deals for Q4 2023, based on virtual data room activity, economic indicators and data from Firmex’s quarterly survey of middle-market M&A practitioners.