Global mergers and purchase are important elements of numerous corporate strategies for growth. They give access to new markets industries, customers, products and technologies. They also boost the power of financial transactions through increased the size and reach. Businesses must consider a wide range of factors before making international acquisitions or divestitures. These include taxation, regulatory concerns, and cultural differences.
In 2024, challenges in the capital markets as well as uncertain macroeconomic conditions weighed on deal activity. We expect M&A activity to pick up in 2024 as capital markets and macroeconomic conditions improve.
M&A can be driven by other strategic goals, such as consolidation or digital innovation. For example, rapid developments in AI, predictive robotics, and smart factories are driving manufacturing efficiencies in the industrial sector.
To expand the market and expand the customer base, it is important to buy companies offering similar products or service in different markets. This is known as market extension. PepsiCo purchased Pizza Hut in order to boost its soft drinks sales.
M&A trends also include shifting to mitigate increased geopolitical risks, focusing on sectors with better market prospects, investing in vertical integration and enhancing the resilience of supply chains. As cash and debt become scarcer buyers are expected to use complex structures, like stock exchanges, minor stakes sales, and earnouts, in order to bridge gaps in valuation. This could involve using private equity investment funds to make the deals feasible.
