Global mergers and acquisitions are a complex multifaceted processes that involve multiple stakeholders, and can be prone to risks. They can also transform companies and boost growth.

The global M&A industry http://www.vdr-tips.blog/what-is-capital-raising/ slowed to a 10-year low in 2023 as investors grew more concerned about the effect of rising rates, geopolitical tensions, and other factors. (See Chart 1). Nevertheless, some experts expect activity to rebound in 2024, as some of these headwinds diminish.

This optimism is due to the fact that there will be a backlog in assets available for sale in 2024. Many private equity (PE) portfolio companies have not sold in recent years because their valuations fell. This will create opportunities for strategic buyers to purchase undervalued assets.

Furthermore, the end of the cycle of interest rate hikes and a resurgence in the stock market will increase the amount of debt financing available for acquisitions. This will help reduce the costs of transactions and speed up the closing of deals. M&A will also be used by more companies in order to mitigate geopolitical risks and expand into new markets, industries or revenue streams.

In the second quarter of 2023, a number deals that were structured were concluded. These included sales of minority stakes as well earnouts — structures that allow the buyer to pay for the entire cost of the deal when certain operational or financial milestones are reached after the transaction has closed. This trend will likely to continue as buyers seek to align their incentives and bridge the gap in their valuations.