Over the past three years, the US M&A market has experienced consecutive periods of almost unprecedented variability. On the one hand, dealmakers and their advisers are finally moving past the disruptive impact of the Covid-19 pandemic. That crisis brought M&A to a standstill in early 2020, but a robust recovery materialized in the second half of the year and throughout 2021 on the back of substantial fiscal stimulus and accommodative monetary policy.

On the other, M&A experienced a slowdown in activity from Q2 2022 onwards, reflecting heightened inflation levels, interest rate hikes, and their subsequent dampening effect on economic growth. However, there are now encouraging signs of a budding rebound in US M&A activity, as domestic and macroeconomic conditions gradually firm and strengthen, as indicated by dealmaking data from Q1 2023.

For this study, we conducted an in-depth analysis of the current state of the US M&A market. The report’s primary objective is to clarify the expected trajectory of dealmaking in the eyes of corporate and PE respondents, as well as legal counsel. It charts their own prognoses for M&A activity, and highlights the potential challenges that may hinder even the most well-crafted deal strategies.

The report examines the key trends that are expected to define M&A in the near and medium term, from the need to explore overseas expansion to rampant digital transformation. Simultaneously, it appraises the intersection of various third parties with these trends, and the roles they—specifically escrow agents, M&A lawyers, paying agents, and shareholder representatives—play in mollifying and adding value to increasingly complex M&A processes. Through our interviews with high-level dealmakers, we identify the key attributes they look for in market-leading advisors.

In practice, there is no single template that guarantees M&A success, particularly in a market environment still characterized by economic volatility and geopolitical uncertainty. Nevertheless, this research suggests dealmakers are optimistic about the future and determined, with the assistance of the right team of third-party service providers, to capitalize on emerging opportunities.

Key findings include:

• Almost half of respondents (47%) expect US M&A volumes to increase or increase significantly over the next 12 months compared to 2022. However, more than half (55%) expect the aggregate value of US M&A activity to decrease over that period.
• The greater driver of US M&A activity over the next 12 months is expected to be distressed opportunities, according to 30% of respondents. Conversely, the biggest hurdle to dealmaking will be rising interest rates, cited by 28%.
• The greatest attribute that dealmakers should look for when selecting legal counsel is commerciality/understanding of non-legal concerns, which accrues 24% of our respondent group’s first-place votes, the largest such share.
• While rate of return on deposits has come into focus amid rising interest rates, the other most valuable features that dealmakers look for in an escrow agent are a rapid turnaround (19% of primary votes) and the use of state-of-the-art technology (37% of top-three votes).
• Most respondents (62%) report that the seller in the most recent M&A deal in which they participated appointed a shareholder representative. In more than a third of those cases (69%), this role was fulfilled by an independent third party.