Mergers and acquisitions (M&A) continue to shape the corporate landscape, driving significant changes across industries. Deloitte’s recent M&A update offers a comprehensive look at the current state of the market, shedding light on industry-specific outlooks, emerging deal trends, and pressing issues. Hickman Shearer Managing Director Tim Howard reviews the insights and considers the impact on core industry sectors.
A Snapshot of Global M&A Trends
While global deal volumes have experienced a slight dip, the average deal values are climbing. This uptick is largely attributed to the resurgence of mega deals within the corporate sector. Despite a noticeable pricing gap between buyers and sellers, this discrepancy is gradually diminishing. Factors such as high inflation, interest rates, and valuation pressures are starting to stabilize, creating a more conducive environment for negotiations.
As we look ahead, Deloitte anticipates a surge in deal activity. However, heightened scrutiny means that executing these deals will take longer than before. Let’s dive into the sector-specific predictions and trends shaping the future of M&A.
Sector-Specific Mergers and Acquisitions Activity Predictions
Tech, Media, and Telecom (TMT) The TMT sector is set for a dynamic period with increased M&A activity, particularly in data centres and European telecoms. We can expect consolidation among UK fibre players and a notable rise in tech deals as companies seek to enhance their digital capabilities and infrastructure.
Consumer Industry In the consumer industry, trends like premiumisation and wellness are driving M&A. We are witnessing consolidation in consumer health and beverage sectors, accompanied by ongoing portfolio rationalization as companies strive to align with shifting consumer preferences.
Energy, Resources, and Infrastructure While the UK oil and gas sector shows limited activity, there’s significant global consolidation in reserves acquisition. Additionally, investments in energy transition opportunities are on the rise as the world moves towards more sustainable energy sources.
Financial Services The financial services sector is seeing consolidation among niche and challenger banks. Banks and insurers are engaging in non-core disposals to enhance returns and secure growth capital. This trend reflects a strategic shift towards optimising operational efficiency and focusing on core competencies.
Life Sciences and Healthcare M&A activity in life sciences and healthcare is primarily driven by inorganic growth and portfolio reshaping opportunities. There’s a strong emphasis on personalized therapies and selective acquisitions by super-pharmas, aiming to expand their therapeutic capabilities and market reach.
Private Equity Private equity players are keenly focused on portfolio value creation through transformation and M&A. There’s an active interest in sectors like Tech, FinTech, Healthcare, Energy, and Cleantech, indicating a strategic push towards innovative and high-growth areas.
The Impact on Valuations
The current M&A landscape is significantly impacting valuations across various sectors. High inflation and interest rates have exerted pressure on asset valuations, leading to a more cautious approach from buyers. However, as these economic factors begin to stabilise, we see a narrowing pricing gap between buyers and sellers, fostering a more balanced and attractive market for transactions. Mega deals are becoming more prevalent, suggesting that companies are willing to pay premium prices for strategic acquisitions that promise long-term value and competitive advantage.
How These Findings Could Impact Your Assets
Understanding these trends is crucial for stakeholders looking to navigate the M&A landscape effectively. Whether you’re considering selling, acquiring, or simply holding assets, staying informed about market dynamics can help you make strategic decisions that enhance value. To explore how these findings could specifically impact your assets and strategic goals, get in touch with us.
Our team of experts can provide tailored RICS and ASA credited insights, guidance and technical due diligence ensuring you capitalise on the opportunities presented by the evolving M&A market.
