2023 M&A Outlook: 4 Trends to Watch | EXEL Message Board Posts

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Msg  29733 of 30022  at  3/21/2023 11:31:32 PM  by


The following message was updated on 3/21/2023 11:33:29 PM.

2023 M&A Outlook: 4 Trends to Watch


2023 M&A Outlook: 4 Trends to Watch

FEB 10, 2023

Mergers and acquisitions activity (M&A) at the beginning of 2023 is expected to remain somewhat muted, consistent with the environment in the second half of 2022. But looking further ahead to the second half of 2023 and beyond, deal-making is likely to accelerate, according to Tom Miles and Brian Healy, Co-Heads of Americas M&A at Morgan Stanley. Factors most likely to drive activity include:

-Well-capitalized companies making acquisitions in their core businesses

-Financial sponsors, which are holding record amounts of capital, deploying it in acquisitions

-Uneven performance among companies stoking shareholder activism

-Cross-border M&A making a comeback

3. An environment suited for shareholder activism

Companies handled last year’s inflationary environment differently, which caused a significant amount of performance variance between stocks in the same sectors, Miles said. For the underperforming companies, activists have already launched campaigns to push for changes they believe will create value, and that is expected to continue in 2023.

The number of activism campaigns at U.S. companies in 2022 exceeded 2021 levels by approximately 14%, with M&A and improvement in operations as the most common activist demands last year, each occurring in 49% of campaigns.3

“At these overall lower valuation levels and with varying operating performances between companies, an activist can develop a stake in a public company and launch a campaign with less downside valuation risk,” said David Rosewater, head of Morgan Stanley’s shareholder activist defense practice.

New Activist Campaign Activity Exceeds Historical Averages

Source: FactSet. Includes campaigns targeting U.S. companies with market capitalizations above $500MM as of December 31, 2022; companies may be targeted by more than one campaign per year. Excludes public short campaigns, hostile takeovers without activist campaign, 13Ds filed with no publicly disclosed activism, campaigns supporting management, and exempt solicitations.

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