Home Business NewsBusinessBusiness Growth News What will the collapse of mega-mergers mean for the middle market?

What will the collapse of mega-mergers mean for the middle market?

by Amy Johnson LLB Finance Reporter
23rd Jan 24 12:32 pm

Experts from across the M&A arena have forecast regulators across the UK, EU and the US to hammer-home the same antitrust sentiment that became all too pervasive in 2023’s mega-merger landscape.

Regulators worry that companies such as Apple, Microsoft, Alphabet, Amazon and Nvidia freeze out competitors and between them, they dominate markets such as ecommerce, artificial intelligence chips and digital advertising. In total, they sit on nearly half a trillion dollars of cash and marketable securities.

In the wake of last year’s collapse of the $20bn Adobe-Figma it’s likely that such megadeals will remain off the table in 2024. Claire Trachet, CEO/Founder of the leading business advisory, Trachet, asserts that analysts should expect to see a renewed interest in the ‘more micro’ dealmaking landscape as investors turn their attention towards the mid-sized merger.

In the first few weeks of 2024, several mid-sized UK businesses became targets for overseas investors looking to kickstart the dealmaking scene on the backs of undervalued companies. One business that’s become increasingly popular among US investors is the UK retailer Pets at Home Plc, with an informal poll from Bloomberg sitting the company alongside Covestro, Inwit and Vivendi.

Speculators have also kept a keen eye on the pharmacy giant Boots making a potential return to the London Stock Exchange as the US group Walgreens looks to split from the UK chain following a lacklustre year for IPOs. Analysts expect a possible return by Boots to thaw the UK’s frozen market and inspire further confidence from investors with an interest in the UK’s dealmaking landscape.

Claire Trachet, CEO/Founder of Trachet, said, “Despite a lacklustre 2023, defined by the shrinking of available capital flows and the collapse of headline deals, including Adobe-Figma.

“Founders, investors and analysts alike ought to remain optimistic for 2024, the growth of deals involving UK companies hit their highest quarterly total in the final three months of last year, whilst private equity firms filled the gap left by traditional institutional funding.

“This year, analysts should turn their attention towards the mid-sized merger, as overseas investors look towards the acquisition of undervalued UK firms. I expect that much of the UK’s M&A activity will be determined primarily on the smaller stage, as SMEs and scale-ups continue to be bought out. For founders, spring is just around the corner.”

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