Global Mergers and Acquisitions Trends in 2024
Global mergers and acquisitions are a crucial part of many corporate expansion strategies, giving access to new markets, industries, customers, products and technologies. They also increase the power of financial transactions through increased scale and reach. However businesses must be aware of a variety of aspects when making international acquisitions or divestitures, ranging from taxation and regulatory issues to cultural differences.
In 2024 the uncertainty of the capital markets and uncertain macroeconomic conditions affected deal activity. We anticipate M&A activity to pick up in 2024 as capital markets and macroeconomic conditions improve.
M&A can also be driven by strategic goals, such as digital innovation and consolidation. For example, rapid developments in AI, predictive robotics, and smart factories are driving manufacturing efficiencies in the industrial sector.
A key strategy is to acquire companies from different regions that offer similar products or services in order to increase market reach and the customer base. This is known as market extension. An example of this is when PepsiCo bought Pizza Hut to significantly boost its soft drink sales.
M&A trends include shifting to lessen increased geopolitical risks, focusing on sectors with stronger market outlooks, investing in vertical integration and enhancing supply chain resiliency. In addition, as the supply of cash and debt decreases, we expect sellers and buyers to embrace complex structures to bridge the gap in valuations, like stock swaps or minority stake sales as well as earnouts. This may include using private equity investment funds to make deals viable.
