There seems to be a much more positive outlook when discussing the potential for M&A activity in 2024, and that includes the potential for deals across the pond. Bloomberg recently highlighted a survey conducted by Deutsche Numis, showing that British companies and institutional investors feel acquisitions will pick up this year. The survey showed that 88% of UK corporates have a positive outlook for M&A activity in 2024, and they're predicting larger transactions.
The survey results indicate there could be more "transformational" deals, possibly double the amount we saw last year. This is encouraging news and a sign of growing confidence and improving market conditions, especially as Bloomberg reported deals were down 25% in Britain in 2023 compared to 2022 and 60% compared to 2021. But the tide may be turning with an increase in late 2023 that coincided with more positive economic news, and, of course, news of interest rate drops to come.
The Deutsche Numis survey cited by Bloomberg also notes that respondents were most optimistic about acquisitions in the financial sector and real estate. Respondents also felt that cross-border deals will be on the rise this year.
A&M also released a report late last year exploring the outlook for Europe, the Middle East, and Africa (EMEA) M&A in 2024, and they also predict a rise in activity as early as Q1 of this year. They point to the "trajectory of interest rates" as a major driving factor behind this newfound confidence, and while inflation in the UK remains a bit elevated, it has fallen significantly.
The A&M authors point out a few other factors that will positively impact activity this year. This includes a move away from the pricing "mismatch" that plagued many deals over the past year. As buyers begin to have a clearer economic outlook and targets have started to adjust their expectations, there is less of a gap between the two sides regarding valuation. And, of course, debt financing is becoming easier to secure – and that should only continue as interest rates drop.
Many factors can potentially negatively impact global deal-making, including the unrest overseas and regulatory concerns. However, many positive factors are also giving us a reason to be hopeful that we are on track to see activity pick up in the UK and beyond.
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