M&A Outlook in 2023: Fancy buying a football club?

Following Chelsea F.C.’s (arguably unexpected) sale earlier this year, more recently Liverpool F.C., Paris Saint-Germain F.C., Manchester United F.C. have all become clubs which may be put on the market in the forthcoming months, and which at least (in the context of professional sporting clubs), suggests that 2023 may see an increase in M&A activity in comparison to the latter half of 2022. 

To the surprise of many, and (dare I say it again) in the midst of the Covid-19 pandemic, the unexpected increase in deal-making and transactional activity in the M&A market in 2021 surprised us all. 2022 was considered to be a year which would to a degree ride the wave of momentum created by its predecessor in the global marketplace. Nevertheless, the truth is that towards the latter half of this year, the M&A market has somewhat plateaued, which begs the question as to what can we expect for 2023? In short 2023, more so than ever, may be about the right buyer pursuing the right deal.

In recent months, the volume of M&A transactions at a global level has arguably reduced, and notably staggered by an unexpected flurry of factors, including: (i) inflationary increases; (ii) central banks’ increasing interest rates to combat recessionary pressures; (iii) the fear of a recession in itself; (iv) increased costs associated with traditional acquisition financing (and re-financing); (v) enhanced volatility in equity markets; (vi) lower corporate valuations; and (vii) unexpected geopolitical variables such as repercussions of the war in Ukraine, or the changes in leadership at 10 Downing Street. All in all, it would appear that the global market will continue to navigate in ‘choppy waters’, or certainly be subject to several economic headwinds which may be blowing hard enough to dissuade even the keenest or most speculative investor from pursuing any form of acquisition or takeover.

Notwithstanding the foregoing, there is no reason to suggest or assume that it will be boom and gloom for 2023, and that a surge in activity is not beyond the realms of possibility. While ultimately new geopolitical influences in 2023 are truly anyone’s guess, arguably, deal-makers who possess an abundance of post-pandemic liquidity or substantive ‘dry powder’ (and are able bypass relying on third party lending), will certainly be in a position to capitalise on those lowered valuations, or take advantage of those on the sell-side expected to be in distressed situations. As time continues to move us further away from the pandemic’s financial backlash, 2023 is likely to be a period of realistic and meaningful re-evaluation, whereby players in the market may likely spot opportunities (such as football clubs for sale) in valuing historical targets, and understanding their desires or needs for selling in the post-pandemic reality. In addition, we must remember that the marketplace is sector specific, and that deal activity is expected to resume in both pharmaceuticals and technology (as well as, by the looks of it, football). Finally, industries able to pass inflationary pressures to consumers will likely also be able to maintain their margins and profitability, and this, together with the belief that interest rates may decrease during 2023, may also act as catalysts for enhanced deal-making activity to occur in the new year.  

Overall, despite the turbulences the M&A market may have been subjected to in recent months, the appetite for growth and scalability (at least for those who can afford to do so), remains intact. While M&A activity in 2022 was always unlikely to reach the historical peaks of 2021, deal activity is at the very least likely to remain steady as we head into 2023, noting that deal-making can be slowed down, but it most certainly cannot be stopped.

First published by James Noguera.