Global mergers and purchases are crucial to many strategies for growth in corporations. They allow access to new markets and industries, customers, products, and technologies. They also boost financial strength through increased scope and impact. Businesses must consider a wide range of factors prior to making international acquisitions or divestitures. These include taxation, regulatory concerns, and cultural differences.
In 2024, the challenges of financial markets and uncertain macroeconomic circumstances affected deal activity. We anticipate M&A activity to pick up in 2024 as the capital markets and macroeconomic conditions improve.
M&A can also be driven by strategic goals like consolidation and digital innovation. AI robotics, predictive robots and smart factories, for example are enhancing manufacturing Global mergers and acquisitions efficiency in the industrial sector.
To expand the market and expand the customer base, it is important to acquire companies that offer similar products or services across different geographical markets. This is referred to as market extension. A good example of this is when PepsiCo bought Pizza Hut to significantly boost its sales of soft drinks.
M&A trends include shifting to lessen the risk of geopolitical instability, focusing on sectors with better market outlooks, and investing in vertical integration and building supply chain resiliency. As cash and debt become scarcer, we expect buyers to employ complex structures such as stock exchanges minority stakes sales, as well as earnouts to bridge valuation gaps. This may include using private equity investment funds to make deals viable.