In April, L’Oreal signed a deal to acquire beauty brand Aesop. Hewlett Packard Enterprise made a $500 million acquisition of Israeli cloud security firm Axis. Energy Transfer, a U.S. midstream firm, has merged with Lotus Midstream Operations to the amount of $1.45 billion. The analysts predict that these and other deals will increase M&A activity in the second quarter of 2023.
However, the underlying factors are slowing deal-making. Inversion of the yield curve, in which short-term debt instruments have higher yields than bonds that are longer-term is unsustainable. Rising interest rates are making it unattractive to borrow money and are also shifting the focus of a lot of companies toward internal initiatives rather than M&A. And global volatility is putting off potential buyers.
Another factor that is shaping the future of M&A is the growing focus on ESG (environmental social and governance) issues. As these issues are incorporated into the strategic agenda of more CEOs and directors, they’re likely to be driving M&A which includes acquisitions and divestitures of assets with the purpose of reducing their ecological footprint.
Finally to that, the M&A scene is experiencing further transformation as companies search for partners that are closer to their core business objectives. M&A will continue to grow in industries with supply chain disruptions which are increasing, and where vertical integration is more important than ever. This includes information and communications technology (ICT) medical technology as well as fintech, food manufacturing and the automotive industry. In addition the trend of consolidation is likely continue in sectors where startup success has led to high valuations. This will include areas like artificial http://thisdataroom.com/how-virtual-data-room-vdr-benefit-ma-deals intelligence, augmented realities, telemedicine, and blockchain.