Upcoming Deal Trends
In April, L’Oreal signed a deal to buy beauty brand Aesop. Hewlett Packard Enterprise made a $500 million acquisition of Israeli cloud security firm Axis. Additionally, U.S. midstream company Energy Transfer merged with Lotus Midstream Operations for $1.45 billion. Some analysts predict that these and similar deals will increase M&A activity in the second half of 2023.
However, the underlying conditions are slowing the process of negotiating. An inverted yield curve – where shorter-term debt instruments offer higher yields than bonds with longer maturities is unsustainable. The rising interest rates are making it difficult to obtain loans, and they’re also shifting the focus of many companies to internal initiatives, instead of M&A. And global volatility continues to discourage potential buyers.
Another driving force that will shape the future of M&A is a growing focus on ESG (environmental social, societal and governance) issues. As these issues are integrated into the strategic plans of more CEOs, they’re likely to drive M&A that involves purchases and divestitures of assets with the aim of reducing their environmental footprint.
The M&A landscape is constantly changing as companies seek partners that take a look at the site here are more focused on the primary objective of their business. M&A will continue to expand in industries with supply chain disruptions that are increasing and in areas where vertical integration is needed more than ever. This will include the information and communication technology (ICT), food, manufacturing and automotive industries. Consolidation is also likely to continue in sectors which have been able to enjoy high valuations because of the success of startups. This includes sectors such as artificial intelligence and augmented reality, blockchain and telemedicine.