Global mergers and acquisitions are a complex intricate, nuanced processes that involve many parties and prone to dangers. They can also transform companies and help accelerate growth.
The global M&A industry saw its lowest level in 10 years in 2023, as investors became increasingly concerned about the impact of rising rates, geopolitical tensions, and other factors. (See Chart 1). Some experts believe that the market will rebound in 2024, once some of the headwinds ease.
One reason for this optimism is that there is a backlog of assets will come to market in 2024. Many private equity (PE) portfolio companies http://www.vdr-tips.blog/how-much-does-a-merger-and-acquisition-cost/ have not sold recently because valuations declined. This provides buyers with a chance to acquire assets at lower price.
The ending of the current cycle of interest rate hikes and a resurgence in the stock market will also increase the number of loans available for acquisitions. This will reduce the costs of transactions and speed up the time to complete deals. M&A can also be used by more companies to mitigate geopolitical risks and expand into new markets, industries or revenue streams.
The second half of 2023 saw numerous structured transactions, such as sales of earnouts and minority stakes–structures that require the buyer to pay out the full purchase price only after certain financial or operating milestones are met once the deal closes. This trend will likely to continue as acquirers seek to align their incentives and close the gap in their valuations.