Global mergers and acquisitions are an important elements of numerous corporate strategies for growth. They allow access to new markets, industries, customers, products, and technologies. They also boost the strength of your financials through a greater scope and impact. However companies must be aware of a range of factors when making international acquisitions or divestitures, ranging from taxation and regulatory issues to cultural differences.
In 2024 the uncertainty of the financial markets and uncertain macroeconomic conditions weighed on deal activity. We anticipate M&A activity to pick up in 2024 when capital markets and macroeconomic conditions improve.
M&A can be driven by other strategic goals, such as digital innovation or consolidation. AI robotics, predictive robots and smart factories, for instance, are driving manufacturing efficiency in the industrial sector.
To expand the market and increase the customer base, it’s important to acquire companies that offer similar products or service in different geographical markets. This is known as market extension. An example of this is when PepsiCo purchased Pizza Hut to significantly boost its soft drink sales.
M&A trends are also shifting to reduce the risk of geopolitical instability and focusing on sectors that have more favorable market outlooks, as well as investing in vertical integration and strengthening supply chain resilience. As the demand for cash and debt grows buyers are expected to make use of complex structures, like stock exchanges, minority stakes sales, as well as earnouts to bridge gap in valuation. This could mean using private equity funds to make the deal feasible.