Global mergers and purchases are crucial to the many corporate strategies to grow. They open up access to new markets and industries, customers, products and technologies. They also boost the financial strength of companies through greater the size and reach. However, companies must be mindful of a variety of aspects when deciding on international acquisitions and divestitures, including taxation and regulatory issues to cultural differences.
In 2024, the complexities of capital markets and uncertain macroeconomic environment affected deal activity. We anticipate M&A activity to pick up in 2024 when capital markets and macroeconomic conditions improve.
M&A can also be driven by strategic goals such as consolidation and digital innovation. For example, rapid developments in AI, predictive robotics and smart factories are boosting manufacturing efficiency in the industrial sector.
One of the most effective strategies is to buy companies in different geographic markets with similar products https://vdr-tips.blog/what-is-capital-raising or services to increase market reach and the customer base. This is referred to as market extension. One example of this is when PepsiCo bought Pizza Hut to significantly boost its sales of soft drinks.
M&A trends also include shifting to mitigate the risk of geopolitical instability, focusing on sectors with better market prospects, investing in vertical integration, and enhancing supply chain resilience. As the amount of debt and cash available decreases, we expect sellers and buyers to embrace complex structures to bridge valuation gaps like stock swaps or minority stake sales as well as earnouts. This could include the use of private equity funds to make the deal financially viable.
