Ansarada's CRO, Justin Smith: Navigating the M&A Landscape Amidst Unprecedented Challenges and Emerging Opportunities

Dear Customers,

In 2023, in the face of economic volatility, geopolitical tensions, and an intensified emphasis on sustainability, astute dealmakers who successfully steered through these intricacies identified mergers and acquisitions (M&A) as a crucial avenue for growth and strategic realignment for their clients. To further enrich our understanding, I convened a panel of 15 of the world’s leading dealmakers to share their perspectives on the 2024 outlook, providing a unique and comprehensive view of the future of M&A.
 
I am hugely appreciative of all the dealmakers across the globe who shared their time with Ansarada to shed light on some of the major trends for the new year. Thank you to Anton Sahazizian of Moelis & Company, Ariel Deckelbaum & Michael Littenberg of Ropes & Gray, Fredrik vom Hofe of Shoreside Equity Partners, Jan Olsson of Deutsche Bank, Jess Zhou of Boehringer Ingelheim, Jonathan Aiken of BDA Partners, Katie Klosterman of UBS, Claire O’Donnell & Lucy Bruce Jones of Norton Rose Fulbright, Karen Baum of BDO, Louella Stone of MinterEllison, Louise Wallace of CMS, Lucien Ong of Jebsen & Jessen Group, and Shengyan Fan of China Everbright Limited.

Soft GDP projections, the anticipation of higher-for-longer interest rates, and a challenging financing environment caused big-ticket, transformational M&A to vanish almost entirely.

And yet, for those dealmakers able to navigate these troubled waters, M&A continued to present an invaluable path to growth and a means to realign businesses’ strategies with changed market conditions. One company’s divestment of a noncore asset is another’s opportune bolton acquisition or diversification play.

With inflation rates falling and central banks beginning to consider the loosening of monetary policy, a slight revival in M&A deal volumes can be expected in 2024. Although, average deal values are unlikely to reach the heights achieved during the immediate post-pandemic era.

As long as market conditions remain somewhat fraught, creative deal structures will continue to appeal as Dealmakers look to bridge valuations gaps between buyers and sellers. Alternative funding structures and minority investments have come to the fore, and historically popular mechanisms such as earnouts are again prevalent.

Activity on the Ansarada Deal platform shows Dealmakers are taking more care than ever in their due diligence processes. More resources are being dedicated to deals, reflecting not only the complex financial environment and poor sentiment, but also an increasingly strict regulatory environment. ESG analysis and reporting are no longer a nice-to-have, but essential as part of the due diligence process with corporates seeking greater transparency and the confidence to fulfill their ESG disclosure and accounting obligations. It has also become apparent that rampant digitalization and cyber security incidents has highlighted the need for Dealmkers to prioritise cyber security from their technology providers. 

Dealmakers clearly have a lot to think about, and preparations are underway to capitalize on the coming revival in M&A and to make the most of the lessons learned over the last couple of years. Against this backdrop, we turn to the experts for their outlook on dealmaking today and achieving a sense of order in the year to come.

Here are my four key takeaways from our new 2024 M&A Outlook Report:

1. Navigating geopolitical waters: With conflicts, global tensions, and major elections on the horizon, dealing with uncertainties will be vital. Understanding what can be controlled, from supply chains to political shifts, is crucial for a steady course.
2. Banking on clarity: Central banks are on high alert against inflation. Monitoring their signals, especially in the next 12 months, will be essential. Clear guidance on rate changes will influence the economic landscape and, consequently, dealmaking strategies.
3. Due diligence overhaul: Macro changes, ESG priorities, and stricter regulations demand a thorough due diligence revamp. The dip in dealmaking volumes will allow for deeper examinations and better risk mitigation, enhancing post-merger integration.
4. ESG: Not an afterthought: Sustainability is now a core consideration. Beyond optics, a robust ESG profile is seen as a positive growth factor. As regulations evolve, businesses will be wise to proactively position themselves as sustainable and responsible.

As we start 2024, Navigating the M&A Landscape Amidst Unprecedented Challenges and Emerging Opportunities. We eagerly anticipate the opportunity to continue serving you with excellence.

The 2024 M&A Outlook: Q&A with15 top Global M&A Dealmakers, . Download it here.
 
Kind regards,
Justin Smith
Chief Revenue & Marketing Officer