After a deep-dive into the various elements of the M&A market last year, our panel of five top bankers told 650 registrants of our exclusive Lead Left Presents webinar that conditions for 2023 are beginning with “wait and see.”

“We’re having daily conversations with clients about how long to wait,” one reported. ”What won’t change is rates. Indicators that may change will come from the economic picture.” For example, what is the likelihood of a recession. And if it happens, how long will it be, and how deep? The latest GDP numbers for 4Q came in at 2.9%, modestly off from 3Q’s 3.2%.

Higher for longer rates and any kind of slowdown could kick middle market loan default rates up to 3-5%, a meaningful lift compared to the past near-zero decade. “If defaults come back down that could energize lenders, if not they could back off.”

How will market conditions affect private equity fundraising? Right now there’s a “logjam”; only the best of the best get through. LPs are overextended with the denominator effect, public market valuations are coming down, and selling (and therefore) distributions are declining.