CFOs bullish on M&A prospects: survey

Dive Brief:

More than 90% of U.S business leaders in a recent survey said their organizations are either pursuing a merger this year or are interested in doing so.
Sixty-five percent of respondents — mostly finance leaders — said their companies will acquire or consider purchasing another organization in 2023. About 30% said their organization will be acquired or consider being bought. Only 5% of companies had no plans for deal-making this year.
The survey, conducted by Wakefield on behalf of CFO.com, may point to a rebound in merger and acquisition activity as the year unfolds, following a slump in 2022, according to a report on the findings. “Despite slower M&A activity in 2022, organizations once again look to build through strategic acquisitions, and most will target small or midsize deals,” the report said.

Dive Insight:

The total value of M&A in the U.S. and Canada dropped to about $1.5 trillion in 2022, down 41.4% from record levels in 2021, as rising interest rates and a slowing economy dissuaded companies from expanding, according to S&P Global Market Intelligence.

The downward trend continued in the first few months of 2023 amid persistent economic headwinds and turmoil in the banking system, according to data from PitchBook. Deal value during the first quarter of the year fell to $993 billion, lagging by 32.2% the record total during the fourth quarter of 2021.

Still, CFO.com’s research shows that a large number of business leaders from a variety of industries are bullish about the economy. More than half said they expect the economy to expand. Only 8% of respondents anticipated a significant recession.

Earlier this month, New York Federal Reserve President John Williams, who is also a vice chair of the central bank, said he expected inflation to ease to 3.25% this year and subside to the Fed’s 2% goal during the next two years. He also predicted the economy will avoid recession in 2023, differing from a forecast in March by Federal Reserve economists.

The Fed’s March meeting minutes include predictions for a mild recession starting later in 2023, followed by a two-year recovery period.

A total of 500 U.S.-based business leaders completed the CFO.com survey, which was conducted in partnership with Oracle NetSuite from March 17 to March 30. Respondents included 300 CFOs, 100 non-finance executives, and 100 directors or managers representing various sectors including manufacturing, professional services, advertising, retail, financial services, and software.

CFO.com is owned by Industry Dive and a sister publication of CFO Dive.