What is the most important thing businesses should know about the economy in 2024?
January 16, 2024
Published in the Business Record PM Daily 1/16/24
By: Tom Cavanagh, Vice President - BCC Advisers
Confidence is back, but that doesn’t equal optimism or growth expectations. As an M&A adviser, I play in a world where as long as the rules are known, buyers and sellers can generally agree on valuations and structures to come to an agreement on a transaction.
At this time last year, there was a lot of uncertainty about the direction of the economy and how severe any downturn might be. The result was a substantial decrease in M&A volume, particularly in the first half of the year. Today, folks are seeing the light at the end of the tunnel when it comes to inflation, rising Fed rates, input shortages, transportation costs and employment disequilibrium.
There are certainly still challenges ahead, but the kneejerk responses of suppliers and customers have put strains on profitability, and I expect a less erratic environment will enable more efficient operations, including staffing and inventory levels, which will result in higher profitability in 2024 followed by optimism and growth in 2025.
We’re seeing the M&A market pick back up, starting in Q4 2023, and carrying into this year. That’s a positive sign and is indicative of the rising confidence level across the middle market in particular.
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