Global mergers and acquisitions can be complex and nuanced procedures that involve a variety of stakeholders and rife with potential pitfalls. They can also transform companies and speed up growth.
The global M&A market reached an all-time low in 2023 as investors became more concerned about the effect of rising interest rates as well as geopolitical tensions among other factors (see Chart 1). Nevertheless, some experts expect that the market will pick up in 2024, as some of these headwinds diminish.
One reason for this optimism is that a pile of assets is expected to come to market in 2024. In recent years, many private equity (PE), portfolio companies haven’t been sold due to declining valuations. This will provide buyers with a chance to acquire assets at lower price.
The ending of the current cycle of interest rate hikes and a recovery in the stock market will increase the number of loans available to purchase. This will reduce the cost of transactions and speed up completions. M&A can also be utilized by more companies to reduce geopolitical risks and expand https://vdr-tips.blog/transaction-rooms-mobile-apps-main-functions into new markets, industries or revenue streams.
The second quarter of 2023 witnessed a number of structured transactions, like sales of earnouts and minority stakes, which are structures that require the buyer to pay the full purchase price only after certain operational or financial milestones are met after the deal closes. This trend is likely to continue as acquirers seek to align their incentives and close the gap in their valuations.
