Companies get by with a little help from their friends in 2023

It’s March. If you’re like me, by now, your New Year’s resolutions are either collecting dust or just starting to pay dividends. Which scenario we find ourselves in often depends on realizing early that we need to work with others to achieve our goals — those that find the best team tend to find the best results. Going into 2023, PT/MC companies seemed to agree with this logic.

At the beginning of the new year, the Power Transmission Distributor’s Association posted an article about recent mergers and acquisitions on its website. According to the PTDA, companies across the PT/MC marketplace were choosing to work together. Despite 2022’s economic witches brew of interest rate spikes, bond market instability, a pullback in leveraged finance, and more, several companies chose to unite.

“Mergers and acquisitions are on the rise across all industries, and the PT/MC marketplace is no exception. Not even a global pandemic could sideline M&A activity. Economies of scale and scope, increased market share, tapping into new markets and fresh talent — all can bring great rewards.”

The PTDA specifically cited Motion’s blockbuster acquisition of Kaman Distribution Group (KDG) and FICODIS’ acquisition of independent distributors, to name a few. A recent Wall Street Journal piece also explained that we can expect even more companies to follow suit in 2023. If not necessarily in the same ways we’ve seen in the past.

“…many companies adapted, structuring deals to sidestep market volatility and minimize financing costs. In doing so, they provided a glimpse of what’s likely ahead for deal-making this year, bankers and advisers said. ‘The M&A market is not going to stop. It just doesn’t work that way. What it does is it evolves,” said Christopher Auld, head of leveraged finance at investment firm Stifel Financial Corp.’”

While 2023 is expected to see an uptick in M&A activity, exactly when is not clear. Mergers and acquisitions are still heavily influenced by the kind of stability and predictability that’s been in particularly short supply in the last few years. How does the Federal Reserve plan to pace future rate increases? Are regulatory demands going to increase as they did in 2022? And, of course, there’s a blue ribbon for anyone that can tell you what will happen with inflation. For now, it looks like companies will continue to band together to reach their goals before the next new year and its new resolutions. DW

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Paul J. Heney • VP, Editorial Director