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2023 M&A slump. M&A volume around the world slowed in 2023, with many businesses postponing dealmaking amid economic uncertainty, the Wall Street Journal states. Steeper interest rates meant that fewer buyers were willing to pay top dollar to acquire companies, and purchasers and sellers were often unable to settle on a price, bankers and M&A professionals said. Even so, US corporate earnings are increasing, and possible interest rate cuts in 2024 could revitalize M&A activity, experts noted. [WSJ]
Potential pickup in 2024. Global M&A activity in 2023 dipped to a ten-year low as higher interest rates made it costlier for companies to finance acquisitions and as buyers and sellers struggled to see eye to eye on prices, Reuters reports. Cross-border deals have become tougher to complete, since some countries have enacted more complex regulations, according to investment bankers and corporate lawyers. Still, the M&A market looks livelier in 2024, with deal volumes picking up in the fourth quarter of 2023. [Reuters]
Vital for growth. M&A dealmakers have weathered a tough year, with global M&A activity in 2023 dropping to $3.1 trillion, a 16% decrease from 2022. Still, CEOs across industries say that M&A is a more vital strategy than ever, McKinsey senior partners Jake Henry and Mieke Van Oostende reveal. Companies that made more than two small to midsize deals annually over ten years through 2022 delivered a median excess TSR of 2.3%, McKinsey’s latest analysis of the world’s 2,000 largest public companies found.
The most active region. The performance of various sectors and regions may indicate which areas of M&A are likely to recover most quickly from the global M&A market’s ten-year low in 2023. The Americas remained the most active market for M&A, accounting for more than half of global activity in 2023. The region also claimed 11 of the world’s 20 largest deals announced in 2023. Consider five steps companies can take now to prepare for what could be a wave of M&A deals in 2024.
— Edited by Belinda Yu, editor, Atlanta
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