Which part of the M&A process will be the most difficult in the next 12 months?
Gap between expected price and bids
According to 57% of respondents chose 'agreeing on price/valuation'.This is mainly due to sellers still sticking to certain price expectations and buyers already taking into account changing circumstances. As a result, there is a chance of a greater mismatch and acquisitions failing. Creative solutions including earn-outs to narrow the price gap can be a solution.
Obtaining financing
26% of respondents expect getting financing to be the biggest bottleneck in the deal process. With higher interest rates and uncertain economic conditions, getting financing from banks is becoming more difficult.
How will companies reduce M&A risk in the next 12 months?
According to 33% of respondents, companies will be more selective in picking their targets. Negotiating stricter financial terms ranks #2 (24%), more extensive due diligence ranks #3 (18%) and improve pre-deal preparation ranks #4 (16%). Clearly, respondents want to reduce risks in acquisitions on a broad front.
Source: M&A Trendonderzoek