In 2023, the macro environment will be sluggish, global M&A transactions will tend to calm down, and the capital winter is coming.
On January 30, it was reported that Bain & CoAccording to the latest report, in 2023, global M&A funding hit a 10-year low, and the total M&A market fell by 15% to 3$2 trillion. The total value of the strategic ** trade fell by 6%. Among them, the American market remained stable, while the European and Asian markets performed poorly. By sector, deals in the energy and resources sector increased, while deals in the technology sector slowed.
However, the situation may change in 2024. Bain & Company said in the reportThe global M&A market is expected to emerge in 2024**.
* Noted that there are a number of factors contributing to the decline in global M&A activity in 2023, including a surge in funding costs due to high interest rates, a global economic slowdown, tighter regulatory scrutiny, geopolitical risks, and more. Among them, the biggest obstacle is the gap between the buyer's willingness to pay and the seller's asking price.
Looking ahead to 2024,The report predicts that the backlog of tradable assets will begin to enter the market in 2023 and that the number of global M&A deals will increase in 2024. At the same time, the speed of transactions may also be accelerated.
Bain & Company noted
"During 2023, unfavorable market conditions and factors have led to many businesses or assets not being traded or **, forming a certain backlog. ”Despite the improved market environment, the global M&A market is also facing some challenges, the report said, for example, a failed regulatory review; International geopolitical tensions may make some cross-border M&A transactions impossible; In order to optimize the business and improve efficiency, companies may divest or spin off assets that are not aligned with their core strategy; In order to achieve investment returns, private equity firms may be investing in portfolio companies for a longer period of time.Most companies remain strong on their balance sheets and have ample cash reservesMany companies still have sufficient financial resources to carry out M&A activities
There is a "high probability" that the 2024 interest rate hike cycle will end, with lower interest rates and lower financing costs, which may stimulate more M&A transactions, and global M&A activity will recover steadily in 2024. ”
Due to the soaring energy crisis and security concerns, the global clean energy transition is accelerating, and more sustainable solar and wind energy are gradually replacing traditional fossil fuels.
Liam Connolly, partner at Bain & Company, pointed out that in the global M&A transaction pick-up trend,The energy and resources sector is particularly beneficial, as these industries tend to be capital-intensive and require significant capital investment
"The clean energy transition usually requires a lot of money to build, new energy infrastructure, research and development of new technologies or the purchase of existing energy assets. To raise these funds, companies may engage in more M&A activities, such as non-core assets, mergers to strengthen market positions or attract investment, which will increase M&A deals in 2024. ”Taking the M&A market in Australia and New Zealand as an example, according to **, the total value of the M&A market in Australia and New Zealand in 2023 is US$79 billion, down 13% year-on-year. Among them,The total value of strategic M&A deals increased 4% year-over-year to US$67 billion, with the energy and resources sector accounting for nearly 50% of the total value of strategic transactions
Connolly noted that in 2023, more than $20 billion (about 132.).$200 million) in the energy and resources sector, which could have been much higher if they had not been put on hold or cancelled.
In addition, connolly saidThere are still uncertainties in the energy and resources sector with respect to certain commodities, such as lithium, oil, gas, metals, etcThey are not only affected by interest rates, but also by factors such as supply and demand fundamentals will also lead to their ** volatility, if these commodities *** will change the investment decisions of enterprises and affect M&A activities.
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