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Deal volume and value stabilized in the first half of 2023 following a handful of large deals at the end of 2022. Inflation, high interest rates and other macroeconomic factors are pressuring dealmakers to optimize and review portfolios and evaluate strategic gaps. This focuses deal activity on key strategic areas to build capabilities, rather than building scale. We anticipate deal activity in the second half of 2023 to be stable and continue to be largely driven by strategic gaps or divestitures of non-core assets to provide investment funding. Investment in digital (including automation and artificial intelligence) and reshoring are consistent themes driving M&A strategy.
Improved macroeconomic factors could stimulate economic growth and bolster market confidence and create a conducive environment for M&A in the near to medium term. Some companies — both corporate and private equity alike — may seize this opportunity to pursue transformative deals, consolidate market positions and capitalize on synergies and economies of scale. In the meantime, divestiture of non-core assets from portfolio optimization, surveying of supply chain and increasing pressure on companies to digitize operations remain fundamental themes expected to drive M&A in the near term.
Companies face markets being reshaped by technology and disrupted by geopolitical unrest, a global pandemic and economic shocks. As a result, CEOs are turning to transformative acquisitions to reposition and reinvent their businesses for long-term success. Companies are also beginning to crack the code on how to make big, transformative deals successful: leveraging experience, early and sustained investment in integration, and a commitment to creating and implementing new long-term operating models.
Learn more about leading practices and transformational mindsets in PwC’s new M&A integration report.
“Industrial manufacturing deal activity continues at a steady pace in 2023 as companies seek M&A opportunities for capabilities and strategic gaps, and portfolio reviews drive non-core divestitures.”