The EMEA M&A market is being impacted by market pressures. High inflation, dampening economic demand, and the ongoing Russia-Ukraine war mean that dealmakers are operating in a period of uncertainty. What does this mean for dealmakers? A material impact on M&A activity in the region.
Challenges persist for dealmakers
Per Mergermarket data, the aggregate value of deals recorded in H1 declined for a third consecutive six-month period, with € 336bn worth of transactions representing a 48% drop year-on-year. And the volume of deals also declined over the same period, albeit by a smaller margin of 20.5%, with 7,389 deals recorded.
It seems that dealmakers are putting their plans on hold as market pressures take a toll on the industry. There were just six megadeals (those worth in excess of €5bn) announced in H1, compared to 21 deals in 2022, and 46 in 2021.
An optimistic outlook for M&A?
However, all is not doom and gloom, and there are signs of a tentative return to growth in EMEA. Total deal value increased by 57% between Q1 and Q2, even as deal volume declined quarter-on-quarter – a sign of optimism in an otherwise relatively underwhelming six months of dealmaking.
The economic forecast for European Union growth has been marginally revised upwards on the back of falling gas prices – to 1% in 2023 and 1.7% in 2024, according to figures published by the European Commission. And the annual inflation rate in the euro area decreased to 5.5% in June 2023, down from a decade-high 8.1% a year earlier. However, it will take time for these trends to translate into a more active deal market.
Within a challenging deal environment, corporates will want more than ever to ensure that there is an excellent strategic fit with their deal target, prompting a more selective approach. Private investors, meanwhile, will be looking towards opportunities in struggling sectors and capitalizing on volatile markets.
To find out more about M&A deal activity across EMEA, including sector performance, league tables, and potential opportunities, read Deal Drivers: EMEA HY 2023.
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