Global mergers and acquisitions are a critical component of many corporate growth strategies, providing access to new markets, industries customers, products and technologies. They also increase the financial strength of companies through increased scale and reach. However, companies must be mindful of a variety of aspects when making international acquisitions and divestitures, from taxation to regulatory issues to cultural differences.
In 2024 the uncertainty of the capital markets and uncertain macroeconomic conditions affected deal activity. We expect M&A activity to pick up in 2024 as capital markets and macroeconomic conditions improve.
M&A can be driven by strategic goals including digital innovation and consolidation. For Acquisition cost formula instance, rapid advancements in AI predictive robotics, predictive robotics and smart factories are driving efficiencies in manufacturing in the industrial sector.
To expand the market and increase the customer base, it’s important to buy companies offering similar products or services in different geographic markets. This is referred to as market extension. PepsiCo bought Pizza Hut in order to increase its sales of soft drinks.
M&A trends also include shifting to mitigate increased geopolitical risks and focusing on sectors that have better market prospects, investing in vertical integration, and enhancing supply chain resiliency. As the demand for cash and debt grows, we expect buyers to use complex structures, like stock exchanges, minority stakes sales, and earnouts, to bridge valuation gaps. This could involve using private equity investment funds to make the deals work.
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