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European M&A Outlook: Four Deal Drivers for 2023 and Beyond



After a record-setting 2021, mergers and acquisitions (M&A) activity in 2022 was poised for a normalization, yet it still hovered near pre-pandemic levels for total deal value. Following the retrench in deal activity last year and the wider macro factors t play, the first half of the year brings some uncertainty to the market. That said, on the whole, there is still expected to be strong opportunities for buyers and sellers across Europe, especially in the second half of 2023. There is ample capital available and a robust appetite for deals, while at the same time sellers are adjusting their expectations in light of market shifts.


We anticipate that M&A opportunities in Europe will fall under one or more of the following four themes, which will continue to have ongoing importance in the months and years ahead:






1. Infrastructure and energy

The energy transition requires large scale investment of the public and private sectors in sustainable energy generation, transmission and storage, which will drive M&A activity in the sector and the wider supporting eco-system. Infrastructure fundraising is at an all-time high, and the amount of dry powder for funds in that space has more than tripled over the past 10 years. 2022 saw significant deal flow related to infrastructure, and that trend is set to continue. Although renewables-focused funds have seen some reversal recently, there are significant opportunities ahead as a broad range of stakeholders prioritize energy sustainability and resilience.


2. Digitalization and business transformation

More than ever before, all businesses need to be digital businesses. Leaders rely on real-time information from across the organization to drive actionable insights, identify efficiencies and capitalize on growth opportunities. As technology has shifted from transformative to table stakes, time is of the essence for companies seeking to enhance digital capabilities and offerings. It can often be quicker and more efficient to buy those capabilities via M&A than it is to build them in house, so this area will continue to be a pivotal deal driver. Digitalization is particularly critical in certain sectors—especially technology, media and telecom, healthcare and business services—which will see heavy competition for suitable targets.


3. Regulatory changes and environmental, social and governance (ESG)

ESG considerations have rapidly risen as a priority for European businesses, and they will only become more important in the years ahead. However, relevant regulations and reporting frameworks are still evolving. Businesses seeking to comply with ESG and sustainability standards will use M&A to realize their goal, including carve-outs and divestitures.


4. Supply chain management and consumer behaviour

The COVID-19 pandemic caused widespread supply chain disruption—exposing the fragility of just-in-time delivery models and related practices—as well as lasting shifts in consumer behaviour. Building greater visibility and resilience into the supply chain has become a critical priority for businesses in many different industries, which can also help address heightened customer expectations. Even as supply chain disruption has diminished somewhat since 2021, rising costs, consistent availability of materials and ability to forecast demand are just some of the priority areas for supply chain management that most businesses still seek to address.


There are many factors at play for both the broader economy and each individual business’ performance, but we see these trends playing a large part in determining which investment decisions maximise opportunity for years to come. The future looks bright for dealmaking in Europe, and as market volatility subsides, deal activity will be ascendant once again this year.

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