Global mergers and purchase are crucial to the many corporate strategies to grow. They allow access to new markets industries, customers, products, and technologies. They also boost the strength of a company’s financial position through greater scope and impact. However companies should be aware of a range of factors when deciding on international acquisitions and divestitures, from taxation to regulatory issues to cultural differences.
In 2024, the uncertainties of capital markets and uncertain macroeconomic situations affected deal activity. However we anticipate M&A to increase in the second quarter of the year, as these headwinds recede and the outcomes of various elections are public.
M&A can be driven by strategic transaction rooms objectives including digital innovation and consolidation. For instance, rapid advancements in AI predictive robotics, predictive robotics and smart factories are boosting manufacturing efficiency in the industrial sector.
One of the most effective strategies is to acquire companies in different regions that offer similar products or services, to expand market reach and customer base. This is known as market extension. A prime example is when PepsiCo bought Pizza Hut to significantly boost its soft drink sales.
M&A trends include shifting to lessen increased geopolitical risks and focusing on sectors that have stronger market outlooks, investing in vertical integration and building the resilience of supply chains. As the supply of cash and debt becomes more scarce we expect buyers to employ complex structures like stock exchanges, minor stakes sales, and earnouts, to bridge gaps in valuation. This could mean using private equity investment funds to make the deals viable.
