Benchmark International

This year, there is a great deal of optimism for M&A dealmaking for several reasons. Financial markets are improving as inflation slows, and interest rates are expected to see much-anticipated cuts. There is also a pent-up demand for deals, combined with an excellent supply of deal availability. Additionally, many businesses have strategic needs to evolve and remain competitive; for these companies, M&A deals can be their best friend. And while mega deals may be down this year, small and mid-size deals are where the action can be found.

Digital Transformation and Artificial Intelligence

One of the hottest M&A trends 2024 is digital transformation due to AI adoption. Many businesses are still trying to figure out the best ways to use AI to their advantage, as the technology offers many benefits and challenges simultaneously. 

AI’s role in actual dealmaking presents new opportunities for M&A activity. AI tools can help buyers identify potential target companies, conduct due diligence, and manage timelines, all of which can help deals get done faster. When looking at an individual deal, the buyer and seller rely more on AI tools for mining, analyzing, and searching due diligence data. Also, buyers must understand how AI will support their business model.

Shareholder Activism and ESG

Over the last several years, activist shareholder campaigns have increased, with the most common objective reported as the need for operational improvement. Last year, 850 activist campaigns reached a record high. Activist shareholders are using inflation to drive companies to make changes, which correlates to increased M&A deals. 

M&A strategies are also very useful tools in helping a company achieve its environmental, social, and governance (ESG) objectives. For example, in the energy sector, there is a continuing growing interest in carbon capture technologies, which is driving more M&A deals.

Cross-Border M&A

Ongoing geopolitical factors such as the Russia-Ukraine and Israel-Hamas wars are playing a part in the economic conditions of other countries. Europe is geographically close to Ukraine, and more large European companies are increasingly interested in acquiring U.S. businesses. Japan has also had a cyclical rebound, which is driving deal activity in that particular region.

Complicated Deal Structures for Flexibility

To get deals across the finish line, buyers and sellers may be more willing to welcome more intricate deal structures this year. This includes scenarios such as accepting stock in place of cash, and sales of minority stakes in place of company sales. Another structuring option is an earnout, a provision under which the seller is to obtain future compensation when the company reaches certain financial milestones, making the price contingent on the performance of the business after the sale. 

Corporate Acquisitions 

There could be a marked increase in corporate acquisition activity in 2024. We expect to see improved activity this year in three sectors: energy, technology, and healthcare. Companies in each of these sectors are actively pursuing strategies to broaden their portfolios and pursue growth plans, and many of these companies have strong financials, putting them in an excellent position to make moves.

Supply Chains

The ongoing pursuit of supply certainty is fueling M&A around the world. This effort drives M&A activity across various automotive, e-commerce, and healthcare industries. We expect to see more vertical acquisitions, strategic alliances, and joint ventures to improve access to resources and shore up stability in supply chains. Many businesses will continue to look to regionalization strategies to mitigate geopolitical risks, such as sanctions and export controls.

One significant area in supply chains is the race to produce EV batteries. More transactions will take place to secure key components, including mine acquisitions and infrastructure assets. Auto manufacturers will continue to look to secure their EV battery supply chain at every level. 

Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkIntl.com

Europe: Michael Lawrie at +44 (0) 161 359 4400 / Lawrie@BenchmarkIntl.com

Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkIntl.com 

ABOUT BENCHMARK INTERNATIONAL:

Benchmark International is a global M&A firm that provides business owners with creative, value-maximizing solutions for growing and exiting their businesses. Benchmark International has handled over $11 billion in transaction value across various industries from offices across the world. With decades of M&A experience, Benchmark International’s transaction teams have assisted business owners with achieving their objectives and ensuring the continued growth of their businesses. The firm has also been named the Investment Banking Firm of the Year by The M&A Advisor and the Global M&A Network as well as the #1 Sell-side Exclusive M&A Advisor in the World by Pitchbook’s Global League Tables.

Website: http://www.benchmarkintl.com
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