Global mergers and acquisitions are complicated, nuanced procedures that involve a variety of stakeholders. They can be filled with pitfalls. But they also have the power to transform businesses and accelerate their growth.
The global M&A industry experienced a 10-year low in 2023, as investors became more concerned about the effects of rising rates, geopolitical tensions, and other factors. (See Chart 1). Nevertheless, some experts expect activity to rebound in 2024 when some of these headwinds recede.
This optimism is due to the fact that there is a queue of assets that can be sold in 2024. In recent years, many private equity (PE) portfolio companies haven’t sold due to the declining value of their assets. This provides buyers with a strategic opportunity to purchase assets at lower value.
The end of the cycle of interest rate increases and a recovery in the stock market will increase the availability of debt finance to purchase. This will decrease the costs of transactions and accelerate deal completions. In addition businesses will continue to make use of M&A as a way of decreasing the risk of https://vdr-tips.blog/how-to-manage-granular-permissions-for-individual-users-in-vdr/ increased geopolitical risks and expanding into new sectors, markets or revenue streams.
In the second half of 2023, numerous structured transactions were concluded. These included the sale of minority stakes as well earnouts — structures that will require the buyer to pay for the entire cost of the deal if certain financial or operational milestones are reached after the transaction closes. This trend is likely to continue as buyers attempt to align incentives and bridge the gap in their valuations.