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The M&A Trend Study 2024, in collaboration with M&A and Ansarada, unveils crucial insights from leading M&A professionals in the Netherlands. Here are the key findings:
Positive Outlook
The M&A community remains largely optimistic about the upcoming year. There is ample capital available for buyers, stable financing markets, and reasonably controlled inflation. A slight increase in deal volume is expected, although negative geopolitical events could potentially disrupt economic confidence.
Mid-Market Opportunities
Private equity funds continue to engage in acquisitions, particularly focusing on buy-and-build strategies, thereby cushioning the impact on the mid-market compared to larger acquisition markets. Anticipated rises include the mid-market segment and the number of billion-dollar deals, notably in energy transition investments and a resurgence in private equity activity due to more stable financial markets.
Uncertainty and Complexity
Economic fragility in Europe contributes to uncertainty. Calm periods may boost deal volumes, whereas turmoil might lead to stabilisation. Increasing complexity due to economic, geopolitical, and ESG uncertainties diminishes the appetite for M&A. There's a growing inclination towards using complex structures, resulting in less straightforward transactions.
Sector Focus on Technology and Energy
Investments in technology, AI, and the energy transition remain prominent. The demand for technological innovation, high cash conversion, and recurring revenue make these sectors appealing to investors.
Comprehensive Due Diligence
Investors are less willing to invest in every enterprise, leading to more comprehensive due diligence processes emphasizing ESG, commercial, and operational aspects. Climate risks and sustainability issues play an increasingly significant role in M&A.
ESG Criteria as a Deciding Factor
Companies failing to meet ESG criteria risk losing deals. High ESG scores may lead to premiums, while low scores might result in discounts.
Completing M&A deals during an economic crisis remains challenging. Negotiating the price is seen as the most difficult aspect of the deal process for the upcoming year. Due to the uncertain economic climate, most M&A professionals anticipate a decline or stabilisation of valuation multiples.
Source: mena.nl/trendonderzoek-2024
