Discussion on M&A trends in 2024, including interest rate environment, revised expectations, and early buyers. Exploring shift in sellers' expectations, consolidation in the tech industry, IPO market state, antitrust challenges, and consolidation in the Canadian energy sector.
A steady interest rate environment is laying the ground for an M&A recovery in North America and Europe, offering attractive opportunities for early buyers.
Despite challenges, there is optimism for M&A activity in the first half of 2024, with corporates expected to lead the way and private equity also being active.
Deep dives
Outlook for M&A in 2024
The podcast discusses the trends and outlook for M&A activity in the coming year. It mentions that the first half of 2023 had a slow start, but there was a pickup in the second half. However, overall M&A activity globally is expected to be down compared to 2022. The US market is likely to be down about 8-9% this year. The podcast also highlights the impact of the upcoming US election in 2024 and the potential slowdown in the second half of the year. Despite the challenges, there is a level of comfort and confidence among clients in operating in this environment. The podcast also delves into the macroeconomic picture and discusses the expectations of rate cuts by the Federal Reserve. The speakers emphasize the importance of confidence in executing M&A transactions and the need for CEOs and boards to have a good view of the macroeconomic outlook. Overall, there is optimism for M&A activity in the first half of 2024, with corporates expected to lead the way and private equity also being active.
Regional M&A Outlook
The podcast provides insights into the M&A outlook in different regions. In Canada, the consolidation trend in the energy sector continues, and there is a focus on growth outside of the country. The UK and Europe have faced geopolitical challenges, causing a pause in M&A activity, but sentiment is improving, and there is more support for M&A now. Growth in European economies is expected to be flat, with a focus on infrastructure, renewable energy, healthcare, and consumer transactions. The speakers highlight that good deals can still be done in any sector, even with higher interest rates and a challenging environment. The role of private equity is also discussed, with a prediction that corporates and private equity will continue to be active in M&A, but corporates may have more opportunities due to their strong balance sheets and cash reserves.
Factors Impacting M&A Activity
The podcast explores several factors that will impact M&A activity in 2024. It mentions the role of antitrust and regulatory authorities in monitoring transactions and challenging deals. Confidence and economic stability are essential for M&A, and the speakers highlight the need for CEOs and boards to have a strong level of confidence to execute deals. They emphasize the importance of understanding the macroeconomic outlook and providing certainty to the market. The financing environment and the impact of interest rate policies are also mentioned, with expectations of stable rates and potential opportunities for corporates to consolidate and offset rising debt costs. The speakers also discuss the role of private equity and the increasing focus on monetizing portfolio companies.
Sector Focus and Market Strength
The podcast highlights the sectors that are expected to be active in M&A in 2024. Traditional sectors like technology, healthcare, and oil and gas are expected to continue being dominant. The energy sector, especially in Canada, remains prominent, with consolidation driving activity. Infrastructure transactions, particularly in renewable energy, are expected to be topical. The podcast also mentions the challenges and opportunities in the consumer sector, with consumer companies being hit by the macroeconomic headwinds, but offering potential opportunities for strategic or sponsor buyers. It also discusses the role of activism and the increasing focus on ESG considerations. The speakers predict a healthy deal environment in 2024 and expect private equity and corporates to be active in the market.
It’s taken longer than predicted, but a steady interest rate environment is laying the ground for an M&A recovery in North America and Europe. Revised expectations offer attractive opportunities for early buyers – just one of the ways in which events of the past few years will influence the shape of 2024’s deals.
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