Depending on whom you ask, M&A activity in 2023 is plummeting, stabilizing, or bouncing back from the bottom. What most everyone does agree on is that M&A activity is not in a good place currently, and certainly nothing like the highs of 2021 and 2022. Pitchbook characterizes deal volume and values for Q2 2023 as significantly lower than Q1, and nowhere near Q2 2022 or 2021. Still, Q2 2023 is on a rough par with the level of Q2 2019, and the preceding years. And while opinions differ on where in the cycle things stand today, almost all agree that M&A activity will eventually recover – late 2023? 2024? – because there are too many demand drivers (strategic realignment driven by new technologies, the amount of dry powder in private equity, the growing data runway that confirms organizations with more active business model strategies perform better over the long term, etc.) favoring continued growth in M&A activity. It’s too important a strategic tool to dismiss.

Still, this isn’t to say that deal success will be achieved in the same ways as in the past, even the recent past. This is problematic because M&A has been a top revenue generator for many professional services providers in recent years, and yet in 2023, it’s not (or at least, not as much as it used to be). There was even a second burst of activity in the first half of 2023 in which serial acquirers of the previous two years took a breath and began more closely integrating their acquisitions, but most agree this wave has run its course. This means that many providers have made huge investments and resource reallocations favoring their M&A and transactions practice areas in recent years, and now those once-lucrative investments have the feel of Coleridge’s proverbial albatross. Innovators have taken an asset lifecycle approach and linked their transactions practices with their restructuring groups to balance market cycles, but still – many deals and transaction practices are shedding people nowadays, while other resources are being moved elsewhere. The pain is real.