Upcoming Deal Trends

L’Oreal announced a deal in April to purchase the beauty company Aesop. Hewlett Packard Enterprise made a $500 million acquisition of Israeli cloud security firm Axis. Energy Transfer, a U.S. midstream firm, merged with Lotus Midstream Operations to the amount of $1.45 billion. Some analysts predict that these and similar deals will boost M&A activity in the second half of 2023.

But the underlying circumstances slow deal-making. Inversion of the yield curve, which means that short-term debt instruments yield higher than bonds with a longer term is not sustainable. The rising interest rates make it harder to http://thisdataroom.com/how-virtual-data-room-vdr-benefit-ma-deals/ obtain loans and shift the focus of a lot of businesses away from M&A. Global volatility continues to deter would-be buyers.

Another factor that is shaping the future of M&A is the growing focus on ESG (environmental social 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 a intention of reducing their ecological footprint.

In the final analysis it is worth noting that the M&A landscape is undergoing further transformation as companies look for partners that align with their core business purpose. Particularly, M&A is expected to continue to grow in areas where disruptions to supply chains are increasing and the need for vertical integration is becoming more acute. This will include the information and communication technology (ICT) as well as manufacturing, food and automotive industries. Additionally consolidation is likely be a common feature in sectors where startup success has resulted in high valuations. This includes areas such as artificial intelligence, augmented reality, telemedicine, and blockchain.