L’Oreal announced the signing of a deal in April. purchase the beauty company Aesop. Hewlett Packard Enterprise made a $500 million acquisition of Israeli cloud security firm Axis. Energy Transfer, a U.S. midstream company, 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 half of 2023.
However, the underlying factors are slowing the process of making deals. Inversion of the yield curve in which short-term debt instruments yield higher than bonds that are longer-term, is unsustainable. The rising interest rates make it difficult to borrow money and also shift the focus of a lot of businesses away from M&A. Global volatility continues to deter potential buyers.
Another driving force that will shape the future of M&A is the growing focus on ESG (environmental social, societal and governance) issues. As these issues are included in the strategic agendas of more CEOs, they will likely drive M&A which will include the acquisition and selling of assets in order to reduce their ecological footprint.
Lastly it is worth noting that the M&A scene is experiencing further transformation as companies search for partners that match their primary business goals. M&A will continue to expand in areas that have supply chain disruptions which are increasing, and where vertical integration is needed more than ever. This includes information and communications technology (ICT) as well as medtech and fintech, food manufacturing and automotive industries. Additionally consolidation is likely continue in areas where startup success has resulted in high valuations. This includes areas such http://thisdataroom.com/ as artificial intelligence, augmented reality and telemedicine, as well as blockchain.