Inflation, geopolitical conflicts, the climate crisis: macro-economic uncertainties are weighing on M&A transactions, which fell back sharply in 2023. What does 2024 hold in store for French start-ups? Experts from AURIS Finance, an M&A consultancy, give you their analysis.
Challenges and opportunities. These could be the two words describing 2024 for French companies. While the repercussions of inflation are still being felt, France’s innovative companies are grappling with rising raw material and energy prices. Fewer and fewer of them reach the three-year milestone. In fact, business failures are on the rise again. According to the Banque de France, 55,492 companies filed for receivership or court-ordered judicial liquidation in 2023, 34% more than in 2022. France has thus returned to its pre-covid crisis level. The end of 2023 also offered a glimpse into these misfortunes. Luko, a young French insurtech company, went into receivership, while Cityscoot, a self-service scooter rental company, was found insolvent.
A lack of financial backers
Over the course of 2023 and on a year-on-year basis, global M&A transactions fell by 28%. According to Refinitiv data, M&A activity reached its lowest level in a decade, close to the levels seen at the start of the Covid crisis. While French companies continued to attract investors for a time, French start-ups then faced the same difficulties as their US and European counterparts. Central banks cut interest rates to tackle inflation, leading to a shortage of liquidity. Against this backdrop, venture capital and private equity experts revised their positions. Megadeals and mega-fundraisings are becoming rarer (a dozen fundraisings in excess of €100 million were recorded during the year, compared to around thirty in 2022), while deal closing times are getting longer.
New opportunities
In a persistently uncertain environment, financing experts are adopting a wait-and-see approach. They are increasing their vigilance during the due diligence phase and focusing on disruptive innovations that can be deployed at scale. In this context, all projects involving artificial intelligence are being carefully scrutinised. The French ecosystem is already making a name for itself in this sector, with companies such as Mistral AI recently raising €385 million. In order to secure their operations, investors are also paying close attention to project leaders. Entrepreneurs with a proven track record are more likely to raise funds than newcomers, such as French social network project Amo, led by the founders of Zenly, which raised €18 million at the end of 2023.
Our experts at your side
Despite a less buoyant environment than in the past, 2024 holds great opportunities, particularly for highly innovative projects spearheaded by experienced managers. The due diligence phases are getting tougher and require the support of advisors. Experts at AURIS Finance are specialised by sector. Whether you are an investor looking for a new opportunity or a business in the process of being sold, we can assist you throughout your transaction.
