DC Advisory has released its Global M&A Outlook 2025 report, in which the international investment bank sees the market slowing down in 2024 with a 5% drop in transaction volume, following a 24% decline in 2023. However, private equity is expected to play a key role in the market's recovery over the next year.
Key Findings:
- Global M&A activity falls: M&A volume has fallen by 5% in 2024, easing from a 24% decline in 2023, but reflecting a slowdown in activity in the face of increased caution and risk aversion.
- Private Equity Outlook: After a 24% decline in the sector in 2023, volumes have remained stable in 2024, following a period of ‘hibernation’ where funds have remained cautious, the revival of private equity will be key to market recovery, as divestments are years behind schedule and capital available for new investment (dry powder) has reached record levels.
- Increased buyouts to fatten portfolios (build ups): Risk aversion has reduced new private equity transactions, but build-ups (purchases of complementary companies to bolster portfolios), which involve less risk, are increasing in volume. In 2024, there has been an increase in bolt-on acquisitions in private equity, a preferred option due to its lower risk.
- Impact of uncertainty: Political uncertainty and conflict have negatively affected investment decisions.
- Low investor confidence: Investor confidence remains low due to difficult fundraising processes, poor performance of some portfolios and uncertainty over valuations.
- Revival in sight: Looking ahead to the new year, a revival in both private equity and corporate activity is expected, with private equity needing to boost divestments.
The global report can be found at this link.
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