Global Mergers and Acquisitions Trends in 2024
Global mergers and acquisitions are a critical part of many corporate growth strategies, allowing access to new markets, industries customers, products, and technologies. They also increase the strength of your financials through a greater size and reach. However businesses must be aware about a variety of issues when deciding on international acquisitions and straight from the source divestitures, including taxation and regulatory issues to cultural differences.
In 2024, challenges in capital markets and uncertain macroeconomic conditions weighed down deal activity. We expect M&A activity to pick up in 2024 as the capital markets and macroeconomic conditions improve.
M&A can be triggered by strategic objectives including digital innovation and consolidation. For instance, rapid advances in AI, predictive robotics, and smart factories are driving manufacturing efficiencies in the industrial sector.
A key strategy is to acquire companies from different geographic markets with similar products or services in order to increase the market and increase the number of customers. This is referred to as market extension. An example of this is when PepsiCo purchased Pizza Hut to significantly boost its soft drink sales.
M&A trends include shifting to lessen the risk of geopolitical instability and focusing on areas with better market prospects, investing in vertical integration, and enhancing the resilience of supply chains. Finally, as the supply of cash and debt decreases, we expect sellers and buyers to take on complex structures to bridge the gap in valuations, like stock swaps, minority stake sales and earnouts. This could include the use of private equity funds to make the deal financially viable.