How Will the Recent Fed Rate Hike Impact Lower Middle Market M&A

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What will be the impact of the Fed rate hike on lower middle-market M&A? Great question! 

In my personal opinion, I think we’re going to continue to see mergers and acquisitions be strong through the end of 2022, if not into 2023. 

That’s a bit contrary in thinking, as all the talking heads seem to be talking us into a recession if we’re not there already, so why would I say such a thing? 

Here’s my answer: There’s still a lot of capital out there in the market that needs to be put to work. Private equities are sitting on cash right now—that hasn’t changed. Public companies need to find ways to prop up earnings and continue to support their share price. Mergers and acquisitions are a great way to do that. 

Other private companies have very strong balance sheets as a result of the run that we’ve been on for the last 18-24 months. I think all those things combined support the theory that lower middle-market M&A is strong, will be strong and will continue to be strong in the near term. 

Want to learn more about what this means for your business? Reach out and schedule a consultation with our M&A advisory team.