Global Mergers and Acquisitions Trends in 2024
Global mergers and acquisitions form a vital element of many expansion strategies, giving access to new markets, industries, customers, products and technologies. They also improve the financial strength of companies through increased size and reach. Businesses must consider a wide range of factors before making international acquisitions or divestitures. These include taxation, regulatory issues, and cultural differences.
In 2024 the complexities of the capital markets and uncertain macroeconomic environment have weighed heavily on deal activity. However we anticipate M&A to pick up in the second portion of the year as these headwinds recede and the results of a variety of elections are well-known.
M&A can be driven by strategic goals, such as consolidation and digital innovation. For instance, rapid advancements in AI as well as predictive robotics and smart factories are driving manufacturing efficiencies in the industrial sector.
A key strategy is to buy companies in different markets that offer similar products or services in order to increase the reach of their customers and market. This is referred to as market extension. A good example of this is when PepsiCo purchased Pizza Hut to significantly boost its sales of soft drinks.
M&A trends include a shift in the direction of reducing increased risk from geopolitical events by focusing on markets that have better prospects, focusing on investing vertical integration, and strengthening resilience of the supply chain. Additionally, as the supply of cash and debt decreases we expect sellers and buyers to adopt complex structures to fill in the gaps in valuation, like stock swaps or minority stake sales as well as earnouts. This could mean using private equity funds to make the deal viable.
