Although the end of 2022 and the beginning of 2023 showed a decline in M&A transactions, experts at AURIS Finance, an M&A consultancy, are optimistic for 2023. Indeed, despite an uncertain macroeconomic environment, there are good opportunities for both buyers and sellers. Here are some insights:
Rising inflation and interest rates, a tense geopolitical context, raw material market tensions and fluctuating exchange rates are all factors weighing on the dynamism of the M&A market. After a record year in 2021, the volume and value of M&A deals fell sharply in 2022, particularly in France, where the total value of deals involving a French company fell by 46% year-on-year to $156 billion (€147 billion), the lowest value since 2013. According to Refinitiv’s figures, the value of transactions fell by 40% globally and by 38% in Europe in 2022. However, this drop should be put into perspective: compared to 2019, it is only 8% globally, while the European market is 18% above its 2019 level.
French tech stands out
Given that 2020 was a year of catching up on deals prevented during the Covid-19 crisis, it is quite possible that 2023 will follow a similar dynamic. Admittedly, at the beginning of this year, the market still seems to be very much in a wait-and-see mode: investors seem to be waiting for stability in order to position themselves on potential targets and remain particularly attentive to the evolution of inflation levels. Nevertheless, France is showing good resilience for the time being. This is the case, for example, with French technology companies, which have recently raised record amounts of money.
New opportunities emerge
Times of uncertainty can be a source of difficulty, but also of opportunity. For example, the Covid health crisis has forced companies to accelerate their digital transformation, while pressure on energy costs has led to the emergence of new consumer behaviours. For business leaders, every crisis is an opportunity to rethink and redirect their activities. In France, the mid-cap category seems to be particularly promising at the moment. While 2022 was notable for the lack of mergers between giants, the number of deals involving a French company worth more than €1 billion increased from 20 to 31, according to Refinitiv.
Investors and companies in the starting blocks for 2023
For their part, investors seem to have accepted that this crisis is also a time of opportunity. They are now building new funding pipelines and evaluating potential future targets from afar. At a global level, the amount of capital still to be invested by private equity funds is estimated at $1,000 billion. Then there are the corporate players. Companies with good cash flow are not afraid to position themselves now in order to capture market share and disruptive innovation at a later stage. Faced with risk-averse and wait-and-see private equity players, they are now taking a more offensive stance.
Get the support you need
2023 promises to be a year full of opportunities for both sellers and buyers. AURIS Finance’s sector-focused experts will advise you throughout the process. Whether you are an acquirer looking for a target or a seller looking for investors, AURIS Finance can assist you.
