Global mergers and acquisitions form a vital element of a variety of corporate growth strategies, offering access to new industries, markets customers, products and technologies. They also increase financial power through increased scale and reach. However companies must be aware about a variety of issues when making international acquisitions and divestitures, including taxation and regulatory issues to cultural differences.
In 2024, the complexities of the capital markets and uncertain macroeconomic situations have weighed heavily on deal activity. However we expect M&A to increase in the second part of the year when these headwinds lessen and the results of different elections are well-known.
M&A can be driven by other strategic goals, such as digital innovation or consolidation. For instance, rapid advancements in he has a good point AI, predictive robotics, and smart factories are driving manufacturing efficiencies in the industrial sector.
A key strategy is to acquire companies in different markets that offer similar products or services to expand market reach and the customer base. This is known as market expansion. A prime example is when PepsiCo purchased Pizza Hut to significantly boost its soft drink sales.
M&A trends include a shift in the direction of reducing increased risk from geopolitical events by focusing on markets with better prospects, investing in vertical integration, and strengthening supply chain resilience. As cash and debt availability shrinks, we expect buyers and sellers to embrace more complex structures in order to fill in the gaps in valuation, like stock swaps minor stake sales, earnouts. This could involve using private equity investment funds to make the deals work.
