Global mergers and purchases are essential to numerous corporate strategies for growth. They provide access to new markets, industries, customers, products and technologies. They also boost the strength of your financials through a greater the size and reach. Businesses must consider a wide range of factors prior to making international acquisitions or divestitures. These include taxation, regulatory issues and cultural differences.
In 2024, issues in capital markets and uncertain macroeconomic conditions weighed down deal activity. However we anticipate M&A to increase in the second portion of the year as these headwinds diminish and the results of various elections are widely known.
M&A can also be driven by strategic objectives, such as digital innovation and consolidation. For instance, rapid advances in AI, predictive robotics and smart factories are driving manufacturing efficiencies in the industrial sector.
A key strategy is to acquire companies in different regions that offer similar products or services to expand market reach and the customer base. This is known as market extension. PepsiCo bought Pizza Hut in order to increase its sales of soft drinks.
M&A trends include shifting to lessen increased geopolitical risks and focusing on sectors that have better market prospects, investing in vertical integration and enhancing supply chain resiliency. As the supply of cash and debt decreases we expect sellers and buyers to embrace complex structures to bridge the gap in valuations, like stock swaps as well as minority stake sales and earnouts. This could include the use of private equity investment funds to make the deals work.