Middle Market M&A Update: Q2 2024
While the U.S. economy has experienced the fastest tightening of credit conditions since the 1980s, uncertainty still lingers around how long the Federal Reserve will continue to delay rate cuts. Following the notable rate hikes of 2022-2023, M&A deal volumes have declined to some of the lowest levels in a decade and squeezed the most critical exit channel for sponsor-backed assets – strategic buyers. Despite this challenging backdrop for M&A deals, available funds of private equity firms have continued to grow to record levels (~$4.4T in 2023), and the mounting pressure on sponsors to deploy ageing dry powder could likely soon fuel the prevailing trend to reverse course.