After a difficult few years, the international M&A market has reached a turning point and is starting to show signs of an upturn in activity. This is even announced by giants such as PwC in its recent Global M&A Industry Trends 2024 report.
Forecasts suggest that M&A is on an upward trajectory and will see a gradual increase in activity as the year progresses. There are three reasons for this:
However, any merger or acquisition will also face difficulties such as the most expensive financing in the last ten years. This will put downward pressure on valuations and force investors to create more value to get the same return as before.
Moreover, the uncertain macroeconomic and geopolitical landscape will reward those actors and companies that do not feel the pressure and are able to move quickly and accurately in changing environments.
There are important differences by sector. On the one hand, in the last months of 2023 and the beginning of 2024 the upturn has already started in the energy, technology, pharmaceutical, aerospace, defence, mining, industrial production, automotive and technology sectors.
Although evolving more slowly, opportunities already abound in sectors such as retail, real estate and construction, where many companies are still recovering or restructuring. Trailing the most active sectors in 2024 will be the subsectors of AI, semiconductors, electric vehicles, batteries and energy storage, biotechnology and insurance intermediation.
Finally, sectors such as banking and health care are evolving more slowly and may take longer to recover. Consumer spending will also be affected by the limited purchasing power of middle-income households. However, the widespread need for business transformation should instil optimism among investors.
Although January is usually quiet, this first month of 2024 has already seen the announcement of several mega deals worth more than $5 billion, showing an increased willingness to enter into large and complex transactions. Some of the international highlights include Hewlett Packard Enterprise’s $14 billion takeover bid for Juniper Networks, Blackrock’s $12.5 billion bid for Global Infrastructure Partners, the proposed $7.4 billion merger of Chesapeake Energy and Southwestern, and the $6.4 billion joint investment in Vantage Data Centers by DigitalBridge and Silver Lake.
Both these mega deals and small and medium-sized transactions this year will require creative solutions to address today’s challenges. Confianz’s M&A specialists constantly analyse industry trends to provide our clients with the most appropriate advice for each company and sector.
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