Upcoming Deal Trends

L’Oreal announced the signing of a deal in April. purchase the beauty brand Aesop. Hewlett Packard Enterprise acquired Israeli cloud security firm Axis for $500 million. Additionally, U.S. midstream company Energy Transfer merged with Lotus Midstream Operations for $1.45 billion. Some analysts predict that these and other deals happening in the second half of 2023 will boost M&A activity.

However, the fundamental conditions hinder the process of negotiating. An inverted yield curve – where shorter-term debt instruments offer higher yields than longer-term bonds – remains unsustainable. Rising interest rates have made it difficult to get loans and are shifting the focus of a lot of firms to internal initiatives rather than M&A. And global instability continues to deter potential buyers.

A growing interest in ESG issues (environmental Social and Governance) is another force which will affect future M&A. As these issues are incorporated into the strategic agenda of more CEOs and directors, they’re likely to be driving M&A which includes acquisitions and divestitures of assets, with the aim of reducing their environmental footprint.

The M&A landscape is constantly changing as companies seek partners who are more focused on the primary objective of their business. M&A will continue to grow in industries with disruptions to supply chains that are increasing and where vertical integration is needed more than ever. This will include information and communications technology (ICT) as well as medtech food, fintech, manufacturing, and the automotive industry. Consolidation is also likely to continue in sectors which have seen high valuations owing to the success of startups. This will include areas such as artificial intelligence and augmented reality, as well as telemedicine and blockchain.

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