2022's rate-hike chill: when buyers walked away

If 2021 felt like every serious process could find a structure, 2022 felt like the opposite. The archive only records the deals that got announced, signed or cleared, so it cannot show the quiet processes that died before the press release. What it does show is the new bar. In August and October alone, Project Polaris acquires Ping Identity, Vista acquires Avalara, Project Fortress Parent acquires ForgeRock and Oranje Holdco acquires KnowBe4 all pointed in the same direction. Buyers were still active. They were just far less willing to tolerate financing risk, valuation hope or avoidable complexity.

Exit Mode's view is that 2022 broke the cheap-money playbook faster than many founders expected. Rate hikes changed how buyers priced time, leverage and downside. "Dry powder" became a misleading phrase because available capital was no longer the same thing as easily deployed capital. The deals that still got through were the ones with hard strategic logic, cleaner funding or structures that shifted more risk back to the seller. For founders, that is the real lesson from a falling market. When conditions tighten, the process does not merely get slower. The burden of proof moves back onto the company being sold, and the structure becomes less forgiving long before the headline price fully catches down.

The buyers who still moved paid for certainty

One striking feature of 2022 is how many of the surviving take-privates were straightforward cash deals. Project Polaris acquires Ping Identity, Vista acquires Avalara, Project Fortress Parent acquires ForgeRock and BDT Capital Partners acquires Weber all fit that pattern. NRG Energy acquires Vivint Smart Home did too at the end of the year.

That does not mean 2022 was easy. It means that when buyers did move, they wanted a clean path from signing to close. Cash removed one layer of volatility. It also signalled that the buyer had done the work to secure funding before asking the seller to commit. In a rising-rate market, that matters more than usual. Financing that looked routine six months earlier could become uncertain very quickly. Founders should read 2022 as a lesson in what capital markets do to M&A discipline. Buyers with conviction got more conservative on mechanics, not less.

Structure tightened before valuations fully reset

The second lesson is that structure usually turns first. BTRS Holdings acquires Billtrust used cash and shares. Ginkgo Bioworks acquires Zymergen was entirely share-based. Those are not interchangeable with the clean-cash deals above. They show a market where at least some buyers wanted exposure to the asset without carrying all of the risk themselves.

This is where founders misread falling markets. They focus on whether the headline multiple has moved down by one turn or two. The sharper shift is often in who holds the risk after signing. Mixed consideration, share-only outcomes and more conditional paths to value are usually the first signs that a market has turned colder. By the time price expectations reset on the founder side, structure has often been tightening for months. In 2022, the companies that still commanded the best outcomes were not just the ones with growth. They were the ones that could still force the buyer to fund certainty.

Cross-border and regulated deals still had to clear a higher bar

The third lesson is about closing risk. The Toronto-Dominion Bank acquires Cowen paired a Canadian buyer with a US financial-services target in an all-cash deal. Korean Air acquires Asiana Airlines reached cleared status rather than immediate completion, which is exactly the point. In a year like 2022, sector logic was not enough. The path through regulators mattered more because the cost of delay had risen with rates and with market uncertainty.

Founders often talk about buyer appetite as if it were a single thing. It is not. There is commercial appetite, financing appetite and regulatory appetite, and all three can move at different speeds. In easier years, a buyer can absorb one difficult leg of that triangle. In harder years, every weak point threatens the whole process. The 2022 archive shows buyers still paying for assets they wanted, but it also shows more emphasis on clearance, timing and the shape of the close.

Dry powder did not mean a founder-friendly process

The phrase "private equity has dry powder" was technically true in 2022 and still misleading in practice. Oranje Holdco acquires KnowBe4 and Vista acquires Avalara show PE still willing to buy software assets. But willingness to buy is not the same as willingness to run an easy process. Buyers in a rate-hike year tend to be stricter on diligence, stricter on financing assumptions and stricter on how much post-signing risk they are prepared to shoulder.

For founders, that changes behaviour. A stalled process in a falling market is not just frustrating. It is dangerous because time itself is repricing the business while the process drags. The right response is not to keep repeating last quarter's valuation narrative. It is to reduce buyer anxiety fast: clearer numbers, cleaner debt picture, cleaner customer concentration story and a realistic view of what terms still count as good in the current market.

The pattern

The 2022 deals that survived tell a blunt story. Buyers did not vanish. Weak conviction vanished. Clean financing mattered more. Simplicity carried a premium. Sellers who could not support a firm case for value found that risk came back in the form of slower timelines, weaker structure or both. That is what a rate-hike chill looks like from inside the deal room.

Founder's Lens

Adam J. Graham's read on this year: 2022 is the year I started telling founders that "there is money in the market" had become almost useless advice. Of course there was money. The harder question was whether anyone wanted to deploy it on your exact asset, on your exact timeline, with your exact risk profile. Looking back from 2026, the founders who handled 2022 best were the ones who stopped negotiating with the ghost of 2021 and adapted early to the market they actually had.

What it means today

The lesson for 2026 is simple. In any softer market, founders should expect structure to worsen before price fully resets, and they should manage the process accordingly. If an exit process starts to stall, speed up buyer clarity rather than stretching the fantasy. For the archive of the deals that still cleared that higher bar, see the 2022 archive.