In April, L’Oreal signed a deal to acquire the beauty brand Aesop. Hewlett Packard Enterprise made a $500 million acquisition of Israeli cloud security company Axis. Energy Transfer, a U.S. midstream company, merged with Lotus Midstream Operations to the amount of $1.45 billion. Commentators predict these and other deals will increase M&A activity in the second half of 2023.
But the underlying conditions still slow deal-making. A yield curve that is inverted where shorter-term debt instruments offer higher yields than long-term bonds – remains unsustainable. Rising interest rates are making it difficult to get loans, and they’re also changing the focus of many firms to internal initiatives rather than M&A. And global volatility is putting off potential acquirers.
Another factor that will influence the future of M&A is the increasing emphasis on ESG (environmental social, societal and www.thisdataroom.com governance) issues. As these issues become part of the strategic agendas of more CEOs, they will likely be driving M&A including the purchase and selling of assets in order to reduce their environmental footprint.
The M&A landscape is changing as companies seek partners who are more focused on the primary goals of their businesses. In particular, M&A is expected to continue to grow in areas where disruptions to supply chains are increasing and the need for vertical integration is growing more urgent. This includes information and communications technology (ICT) as well as medtech as well as fintech, food manufacturing, and automotive industries. In addition consolidation is likely to continue in sectors where startup successes have led to high valuations. This includes sectors such as artificial intelligence, augmented realities and telemedicine, as well as blockchain.