In this article we look at current M&A trends and offer insight into their likely impact on the market. Here are the key takeaways:
- European M&A activity is still trailing behind historical averages, despite a recovery from last year’s low.
- M&A growth is slow and steady, varying considerably across European markets.
- Looking ahead, significant trends like energy transformation, digitisation, and the growing influence of AI are set to drive the M&A market forward.
- The ongoing caution among dealmakers highlights the complexities of managing current political and economic environments.
- The increasing use of technology such as secure data rooms with integrated AI at the heart of any M&A transaction increases the speed, agility, accessibility and security for all parties involved in the process.
European M&A activity is making a steady comeback after the downturn of 2022
BCG’s 2024 M&A Sentiment Index suggests that while momentum is building, growth is gradual with European deal values hitting $353 billion by Q3 2024—a 14% rise compared to the same period last year. This European growth outpaces the global growth figure of 10%.
That said, European growth is far from consistent when comparing one country to another. The UK, in particular, saw a remarkable 131% increase in deal value, marking its highest share of European dealmaking since 2015. Other countries showing strong growth include Sweden (up 111%), the Czech Republic (up 68%), and France (up 29%), driven primarily by a few larger transactions that boosted their numbers.
On the other hand, some countries faced notable declines. Germany’s deal value dropped by 52%, while Austria, Switzerland, and Italy also saw lower activity, with declines of 34%, 31%, and 25%, respectively. This contrast highlights the variability across Europe, with some markets thriving amid increased activity and others slowing down due to economic or strategic shifts.
Economic factors are reshaping the M&A landscape
Looking beyond 2024, the European M&A landscape is set for a period of transformation driven by regulatory changes, economic pressures, global instability and evolving business strategies. This dynamic environment offers both challenges and opportunities for companies seeking growth through mergers and acquisitions.
Fluctuations in market valuations and capital accessibility, fuelled by the ongoing recovery from recent global disruptions, are prompting businesses to approach investments more strategically. M&A activity in green energy deals, digitalisation and AI will fuel future growth.
With fewer large-scale M&A deals about, we’re seeing many dealmakers focusing on smaller, mid-market deals that are easier to finance and less vulnerable to market volatility. This focus is seen as a way to maintain M&A momentum while managing risk, especially in sectors like technology, life sciences, and media”.
We also expect to see private equity (PE) firms maintain their strong activity, backed by abundant “dry powder”—or available capital—ready for investment. With current market valuations lower than in recent years, these firms are increasingly targeting specific industries through sector-focused investments, joint ventures, and strategic carve-outs, taking advantage of sector-specific growth opportunities. This substantial available capital means PE firms are well-positioned to continue supporting strategic acquisitions and explore new market entries.
Increased focus on data security and compliance
Policymakers across Europe are increasingly focused on promoting competition and safeguarding consumer interests. As M&A transactions become more data-intensive, prioritising data security is critical, especially with GDPR requirements in Europe. ESG (Environmental, Social, and Governance) considerations are more central than ever, spurred by European Union regulations like the Corporate Sustainability Reporting Directive (CSRD) and the Carbon Border Adjustment Mechanism (CBAM). As a result, M&A activities face stricter guidelines, requiring companies to carefully navigate complex, differing compliance regulations while positioning themselves to capture market opportunities.
Secure data exchange platforms such as a Drooms data room that meet international compliance standards allow companies to confidently meet strong data protection regulations. Dealmakers and businesses can manage risks and streamline the transaction process effectively, creating a foundation for sustainable growth.
Shifting priorities among companies are driving innovative approaches in M&A
Digital transformation is making M&A processes faster and smoother. Modern tools, like AI and other digital innovations, are streamlining deal preparation and due diligence, letting dealmakers quickly analyse large amounts of data with fewer errors.
Using a virtual data room such as Drooms as a secure, centralised hub for everyone involved in an M&A deal, drives faster transactions, with integrated AI technology helping reduce the time and complexity involved in every step.
Efficient communication is at the heart of a successful M&A transaction
In the world of mergers and acquisitions, efficient communication isn’t just advantageous—it’s absolutely critical. Time and again, effective communication has proven to be the linchpin that holds together the intricate and often delicate process of a successful transaction. Yet, despite its importance, communication remains one of the most significant hurdles organisations face during M&A activities.
Miscommunication can lead to disastrous consequences, including unnecessary delays in information sharing that can stall a deal indefinitely. Furthermore, the reliance on outdated communication structures only serves to exacerbate these issues, creating bottlenecks that escalate costs and stretch timelines beyond acceptable limits.
Commonly used communications tools such as Slack or Teams are “stand-alone” external solutions that can compromise restricted access requirements and the high security needed for deal transparency. Even WhatsApp is often used for quick updates and deal-related questions. Drooms Chat – the first messenger of its kind in the M&A industry streamlines and maintains confidential communication by keeping everything deal-related on one secure platform, addressing the frustration and security risks of using multiple external platforms for different tasks.
Secure your next M&A deal with Drooms
Selecting the right data room provider is essential for security, data integrity, and transparency, speeding up due diligence and decision-making in complex M&A transactions. Drooms’ data room offers a range of unique features specifically designed for M&A transactions that ensure easy and secure access to necessary information for all stakeholders.
If you would like to optimise your M&A transactions, contact us at contact@drooms.com or click here to learn more about our industry-leading features tailored for successful M&A.
