M&A Overview for Professional Services F23 / F24

Summary of global deal flows in 2023

• According to the Financial Timesglobal M&A review, there was a significant decrease in M&A activity inQ3 and Q4 of 2023.
• Listing volumes were down around 10% andtransaction volumes down by about 13%
• The two major factors thatinfluenced this reduction were:
  • High inflation rates globally
  • Geo - political tensions and resulting uncertainty

Average Valuations during 2023

The above multipliers are applicable for EBITDA greater than $2m Acknowledgement to Equitec for data

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Average Deal Structure during 2023 - 24

• “Buyers are looking to structure deals to better share the upsides and the risks, anyone of the clearest angles they have to bridge valuation expectations is to use-longer earn-outs.” – Brian Masson – Equitec
• Average Deal Structures were as follows:
• 57%Upfront cash
• 12%Upfront shares or equity
• 31%Deferred Earn-out
• Theaverage earn-out period is 2 years

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Prediction for deal flows in 2024

• The Global M&A desk of SS&C Intralinks predict that deal volumes in Q1 2024 will be flat, with marginal decline risks.
• Asia Pacific is facing additional headwinds due to the banking and real estate crisis in China.
• Notwithstanding the above, most global commentators are optimistic about M&A activity through H1 2024.
• “Private Equity still has a record amount of capital to spend and is eager to put it to work.” – John Gannon, Director at Equitec.

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Propensity For Acquisitions in 2024

According to Jerome Glynn-Smith, Managing Director, Head of Europe, at Equiteq,

“What we’ve seen is clearly a stabilizing interest rate environment, which is a positive symptom of the market cooling down from an interest rate perspective.Whereas we’ve had a year of companies in the knowledge Economy essentially adjusting their business plans month on month, now we’re starting to see greater stability in this regard, which should have a positive effect on deal-making activity among buyers.”

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9 PreDicted Deal making and Financing Trends for M&A in 2024

SS&C Intralinks predict the following9 dealmaking and financing trends for M&A in 2024.

1. Embracing digital due diligence
2. Increased regulatory scrutiny
3. The increasing role of AI in dealmaking
4. Private credit to remain an attractive financing option
5. Increasing importance of Post Merger Integration PMI
6. Threats to Cybersecurity in keeping sensitive information secure
7. Rise of the “No-Process Process” in dealmaking
8. Focus on ESG data management
9. Outsourcing Deal Tasks to Consultants / Brokers