Where are we now?

• Economists expect central banks to start cutting interest rates as early as the first half of 2024.
• Dealmaking is anticipated to accelerate this year, as private equity funds look to deploy capital.
• 7 in 10 (~69%) SMB’s said they intend to sell to another company or third party within the next three to five years.
• A survey of small and medium-sized businesses in Canada found that nearly two-thirds (64%) plan to engage in a merger, joint venture, partnership, or acquisition within the next three years.
• Businesses that are high-quality and capable of sustaining growth are expected to attract valuation premiums.

What is holding us back?

• Liquidity has tightened as central banks around the world have raised interest rates, making cash and cash equivalents increasingly attractive investments.
• After coming to a halt in 2022, the IPO market has shown signs of recovery in an irregular pattern.  
• Volatility in the equity markets had been on a steady rise until the late fall, causing investors to hesitate before engaging in further buying activities.

Where do we go from here?

• Conditions to escape the cold IPO Market – With rate cuts expected in the first half of 2024, the probability of the IPO window beginning to thaw should steadily increase [1].
• Corporations to upgrade financial skillsets – As the majority of private SMB’s look to participate in M&A activity, the internal skillsets of the finance team will be pressed to upgrade, focusing on more external financial activities rather than traditional accounting functions.
• Leveraging technology to boost valuations – Finance will continue to evolve from manual, disparate data sets & spreadsheets to unified systems of valuation, monitoring, and forecasting. Firms that invest in such technologies are likely to see significant ROI.