Global mergers and purchases are complex, nuanced processes that involve a variety of stakeholders. They are not without risk, but they can also be rife with dangers. They can also transform businesses and speed up growth.
The global M&A industry reached a 10-year-low in 2023 as investors grew more concerned about the effects of rising rates, geopolitical tensions, and other factors. (See Chart 1). Some experts believe growth to pick up in 2024 as a portion of these headwinds diminish.
This optimism is due to the fact that there is a queue of assets that can be sold in 2024. Many private equity (PE) portfolio companies have not sold in recent years because valuations have declined. This could open up opportunities for strategic buyers to acquire undervalued assets.
Additionally, the conclusion of the cycle of interest rate hikes and a resurgence in the stock market will increase the availability of debt financing for acquisitions. This will reduce the cost of transactions and speed the process of closing deals. Additionally businesses will continue to use M&A as a way of reducing the risk of geopolitical instability and expanding into new sectors, markets or revenue streams.
In the second half of 2023, a number structured transactions were made. These included sales of minority stakes, as well as earnouts, which require the buyer only to pay the full price of the deal when certain operational or financial milestones are met after the transaction closes. This trend could continue as http://www.vdr-tips.blog/how-much-does-a-merger-and-acquisition-cost/ buyers attempt to align incentives in a more difficult context and overcome the gap between their valuations.