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By Staff Reporters
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Cash is king, especially in this tough interest rate environment. That’s proving true in the mergers and acquisitions market this year, according to PwC’s US Deals 2023 midyear outlook, which says companies and private equity with cash in hand are making deals happen. There are “opportunities for corporates with strong balance sheets. Private equity sponsors with large amounts of dry powder also have been getting deals done,” according to PwC.
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Deal makers need cash because lending has become tougher and more expensive to obtain. Additionally, “the IPO market has remained quiet for over a year.”
Even the private equity market, which often leans heavily on debt financing, is reaching for other ways to get deals done: “Some PE sponsors have turned to more creative financing solutions, including higher equity contribution, seller’s notes, paid in-kind financing and the private credit markets.”
The challenging market is also impacting deal size. PwC found that deal makers are eschewing big deals in favor of smaller opportunities. However, although the deals appear to be smaller, the volume of M&A activity is “relatively strong compared to” COVID pre-pandemic levels.
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Filed under: "Ask-an-Advisor", Accounting, Experts Invited, Financial Planning, Funding Basics, Glossary Terms, Investing | Tagged: CASH, cash is king, debt financing, interest rates, IPO markets, IRS, king cash, M&A, mergers acquisitions, money, PE sponsors, PwC | Leave a comment »
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