Valuations and volumes are down to levels not seen for a decade, but important drivers continue to ensure demand does not bottom out

New York, NY – October 11th, 2023–A new report from Compass Pacesetter Research (previously known as ALM Intelligence Pacesetter Research) finds that M&A markets face some serious headwinds in 2023 in the form of economic slowdowns (if not outright recessions), high inflation (and the resulting rising interest rates, i.e., high capital costs), tight financing markets, rising antitrust activism, a volatile geopolitical climate and increasingly politicized trade. Investors and lenders alike are far more risk-averse, boards are jittery, and consumers fret about spending. Not surprisingly, deal volume and values are down, IPOs nearly ground to a halt earlier in 2023, and large, cross-border deals have become scarce. But for all that, M&A markets march on with strong growth in middle-market deals, add-ons, and advanced technology grabs. Private equity is still packed with dry powder, while the huge surge in deal activity over 2021-2022 schooled a generation of corporate finance departments in the advantages of a more active portfolio management strategy. 

“The good news for professional services providers is that clients still see M&A as an important tool in their strategic arsenal in 2023,” said Tomek Jankowski, Director – Compass Pacesetter Research. “The challenge lies in helping clients both close deals, and then achieve the value (financial, operational, talent, geographic market, technology acquisition and deployment, etc.) laid out in the deal thesis over the acquired asset’s full lifecycle – in almost unprecedented market conditions.”

Key trends identified in this research include:

– 2021, and to a lesser extent 2022 were record years in terms of both deal valuations and volume – but that’s over, and 2023 poses unique challenges in terms of resources, financing, regulatory scrutiny, and stakeholder (especially employee) skepticism

– Increased deal pressures now highlight the points-of-failure in deals, prompting providers to focus intensely on the early pre-deal stage or the later post-deal stage(s) (dragging the deal process out) to both ensure the investment narrative is sound and that it consistently delivers the promised value  

– A major breaking point in deals in 2023 is the human capital component, both on the labor law side (TUPE) and the talent retention side, so that deals become de facto workforce transformation projects 

– Advanced technology acquisition is still a prime driver of deals, especially generative AI, while advanced technologies are also tightening and sharpening the transaction process such as cloud-based data platforms, virtual data rooms for due diligence, or AR/VR for inspecting assets remotely 

– As M&A has become more difficult and expensive, a growing number of clients have turned to joint ventures as an “easier” middle step – at the peril of ignoring the complexity of creating and managing joint ventures, including the exit

An important dimension to M&A in 2023 is the prevalence of middle market-focused or more targeted, tactical deals (e.g., add-ons), challenging professional services providers geared towards larger scale, more complex deals. 

The Pacesetter Advisory Council assessed dozens of providers to arrive at twenty-four Innovators recognized for their ability to help clients navigate an increasingly complex market environment. The research and analysis also provide insights into the competitive dynamics and service delivery trends driving convergence across boutiques & technology, investment banking, legal, management consulting, and multi-service providers.

In this report, Compass Pacesetter Research evaluates the innovation in M&A services capabilities and offerings of the following providers: Absa, Accenture, AlixPartners, Alvarez & Marsal, Ankura, Axial, Bain & Company, BDO, Boston Consulting Group, Crowe, Deloitte, EY, FTI Consulting, Kearney, KPMG, L.E.K. Consulting, Lewis Silkin, Lotis Blue Consulting, McKinsey & Company, Mercer, Open Options, PwC, Rödl & Partner, and Willis Towers Watson. Compass Pacesetter Research provides independent, objective research to providers and buyers of professional services and practical insights that inform decision-making processes. 

To learn more about the research or to obtain the full version of the 2023 M&A Report go to:

For more information or the full version of the Compass Pacesetter Research series, visit

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