As the business world grappled with challenges, the M&A landscape proved to be responsive. The pandemic acted as a catalyst, propelling businesses into the digital world. This innovation became not just a luxury but a lifeline.
Remote work trends, once viewed as a temporary fix, have now become a lasting feature for many businesses. It’s reshaping the very foundation of how companies operate and grow.
Europe’s Response
Amid this paradigm shift, European dealmaking has emerged as a notable player in the global tech M&A scene.
The Old Continent, with its rich history and diverse cultures, is now a dynamic hub for technology and dealmaking. The resilience of European businesses during the pandemic has not gone unnoticed. It’s contributed to the region’s rise as a key player in the global M&A game.
The growth in European dealmaking is not merely a statistical uptick; it shows innovation, adaptability, and strategic foresight. European companies, long recognized for their ingenuity, are leveraging this moment of disruption. They’re forging new partnerships to expand onto the global stage.
Global M&A Trends
Ironically enough, dealmaking saw an uptick in the wake of the pandemic. This was largely due to customers and businesses being flush with cash amidst the pandemic stimulus. On top of that, financing was cheaper as interest rates fell to the floor.
Globally, M&A deals jumped by 22% from 2020 to 2021, while European dealmaking saw a similar jump. These spikes continued throughout the first half of 2022. However, it reversed across 2023 as contractionary monetary policy and rising interest rates put pressure on many businesses.
Large Deals Lifted the Tides
Deals saw a temporary uptick in Q2 of last year. That’s largely due to a few major deals that greased the wheels of the liquidity-barren industry. News around UnitedHealth’s acquisition of LHC Group, CVS’s acquiring Signify Health, and more deals like these gave the industry an ephemeral morale boost.
Sectoral Variations in M&A
The landscape of technology M&A is not uniform, but rather a patchwork quilt of different sectors, each weaving its narrative of challenges and opportunities.
Different areas of the industry suffered more than others in 2023. However, a few sectors were able to manage some resilience.
Sector Activity in 2023
- UBS’s rescue takeover of Credit Suisse was a big deal to manage stress in the financial industry.
- Green tech, materials, and software emerged as vibrant players. This showcases a commitment to sustainability and innovation.
Positive Trends in Energy, Technology, and Pharma
- The energy sector witnessed big deals amid the ongoing energy transition.
- The technology sector continued its innovative streak, reflecting a pursuit of cutting-edge solutions.
- Pharma remained robust, emphasizing the enduring importance of biotech innovation.
Slower Recovery in Sectors like Banking and Healthcare
- The banking sector’s M&A movements mirror global uncertainties and cautious financial strategies.
- Healthcare, despite its critical role during the pandemic, experienced a slower recovery. Healthcare businesses are navigating challenges in unprecedented demand and evolving regulations.
Catalysts for Future M&A
The market for M&A deals has undergone a lot of change recently, and that’s not likely to be any different this year. In 2024, some huge trends are likely to serve as guiding lights for the industry. Companies are pushing further into the future with new partners, innovation, and technologies.
The Tech Influence
- The ongoing energy transition is likely to prompt more M&A to move towards a sustainable future.
- Automotive industry changes, driven by electric vehicles and smart technologies, become a focal point for strategic decisions.
- A relentless push for digital competency emerges as a cornerstone for future growth.
- Calmer economic conditions can provide a stable backdrop for more M&A.
Companies Aim to be Leaner and More Agile
- Reshuffle through divestitures and carve-outs. This can improve focus and redirect resources towards strengthening the business.
- Adoption of a dynamic approach to portfolio management, emphasizing flexibility and focus in a changing market.
An Uptick in Europe
- With the hope of decreasing interest rates, the outlook of European companies considering IPO has shifted. The harsh IPO market may soon turn to warmer waters as European firms prepare to go public. This is a sign of renewed confidence and moves to tap into public funding for growth.
- IPOs are avenues for showcasing innovation, attracting investment, and fueling business growth.
- A shift in sentiment bodes well for the overall economic landscape. This signals a potential comeback of IPO activity as companies seek new avenues for growth and visibility.
Conclusion
We hope that you’ve found this article valuable. There have been some huge changes in the M&A world. The industry has undergone many shifting trends in the wake of the pandemic, but this comes with new opportunities.
If you’re preparing for your own M&A deal, make sure you’ve got trusted advisors with industry experience on your side — don’t hesitate to reach out to us.
