Global mergers and acquisitions are an essential component of many corporate growth strategies, offering access to new markets, industries, customers, products and technologies. They also boost financial power 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 situations caused a lot of deal activity. We expect 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 and predictive robots and smart factories, for example are boosting manufacturing efficiency in the industrial sector.
To expand the market and increase customer base, it is important to purchase companies offering similar products or service across different geographical markets. This is referred to as market extension. One example of this is when PepsiCo bought Pizza Hut to significantly boost its soft drink sales.
M&A trends include shifting to lessen increased geopolitical risks and focusing on sectors that have better market outlooks, and investing in vertical integration and building the resilience of supply chains. Additionally, as the amount of debt and https://vdr-tips.blog/what-is-capital-raising cash available decreases, we expect buyers and sellers to take on complex structures to bridge valuation gaps such as stock swaps minor stake sales, earnouts. This could include the use of private equity funds to make the deal viable.