Global mergers and purchases are complex, nuanced processes that http://www.vdr-tips.blog/how-much-does-a-merger-and-acquisition-cost/ involve a variety of stakeholders. They are not without risk, but they can also be rife with pitfalls. They can also transform companies and help accelerate growth.
The global M&A market hit a 10-year low in 2023 as investors became more worried about the repercussions of increasing rates of interest as well as geopolitical tensions and other factors (see Chart 1). Some experts believe that activity will increase in 2024, once some of the headwinds ease.
This optimism is due to the fact that there is a queue of assets available for sale in 2024. Many private equity (PE) portfolio companies have not sold recently because their valuations fell. This provides buyers with the chance to purchase assets at lower value.
The end of the cycle of interest rate hikes and a rebound on the stock market will also increase the availability of financing with debt for acquisitions. This will help reduce the costs of transactions and speed up the closing of deals. M&A can also be used by more companies to mitigate geopolitical risks and expand into new markets, industries or revenue streams.
The back half of 2023 saw a number of structured transactions, like sales of earnouts and minority stakes–structures that require the buyer to pay the entire purchase price only when certain operating or financial milestones are met after the deal is completed. This trend will likely to continue as acquirers try to align incentives and bridge the gap in their valuations.
