Home Business NewsBusinessBusiness Growth News M&A activity set to bounce back in the new year, in spite of a difficult 2023

M&A activity set to bounce back in the new year, in spite of a difficult 2023

by LLB Finance Reporter
2nd Jan 24 2:53 pm

According to a recent report by London Stock Exchange Group’s Deals Intelligence team, the total value of mergers and acquisitions deals involving UK firms fell by 33% to just $265bn over the course of 2023.

However, despite a weak start to the year, September marked a pivotal moment as the deal volume increased to 915 acquisitions, the highest figure since records began, indicating signs of stabilisation within the UK’s M&A landscape.

Factors such as strategic adjustments, enhanced regulatory clarity, and external economic influences contributed to this stabilisation. Despite the challenges, legal experts anticipate a growing confidence in private equity (PE) deal activity for 2024. Claire Trachet, CEO/Founder of business advisory firm, Trachet, discusses what’s on the horizon for M&As in 2024.

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The PE market has displayed resilience amid the overall M&A landscape. While larger buyouts have become less common, PE firms are expected to grow in confidence, with increased volumes in Q4 of 2023, underscored by a recent report by the Office for National Statistics which shows a divergence in the PE market, where high-quality assets face aggressive strategies, while other assets experience extended processes marked by heightened due diligence.

PE firms are also strategically shifting focus to international markets, with outbound M&A increasing. Looking ahead to 2024, there is optimism for a robust PE landscape, with a substantial number of assets prepared for sale in the first half of the year and investment banks reporting record pipelines, signalling a positive outlook for the sector.

Estimates put the total amount of this unused capital at a staggering $3.7tn, and Trachet asserts that it is this capital which will help fund the revival of the global M&A market. However, it is vital that founders are honest in terms of the long-term viability of their businesses and start planning for an exit as soon as the end of the runway is in sight.

If not, Trachet explains, dealmakers can often capitalise on last-minute desperation leaving startups with a less than favourable deal, compared to if they had acted from a point of strength.

Claire Trachet, Founder/CEO of business advisory, Trachet, said, “In today’s unpredictable economic environment, startups are faced with the undeniable challenge of securing their future amidst a challenging economic environment.

“To navigate these choppy waters, it’s crucial that they arm themselves with foresight, continually assessing their financial health and the real-time implications of the broader market. News of stabilisation in the private equity market signals a positive outlook for the start of 2024 after what has been a difficult year.

“Despite a shift away from larger buyouts, the PE market demonstrates strength, showcasing a divergence where high-quality assets face aggressive strategies, and others undergo extended processes with heightened due diligence. The increasing focus on international markets and a positive outlook for 2024, as indicated by record pipelines and a substantial number of assets prepared for sale, underlines the industry’s resilience.”

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