L’Oreal announced the signing of a deal in April. purchase the beauty brand Aesop. Hewlett Packard Enterprise made a $500 million acquisition of Israeli cloud security firm Axis. Energy Transfer, a U.S. midstream firm, merged with Lotus Midstream Operations to the amount of $1.45 billion. Analysts predict that these and other deals will boost M&A activity in the second half of 2023.
But the underlying circumstances slow down the process of making deals. Inversion of the yield curve in which short-term instruments of debt yield more than bonds that are longer-term is unsustainable. Rising interest rates have made it less attractive to borrow money and are changing the focus of many companies toward internal initiatives rather than M&A. Global volatility continues to deter would-be buyers.
Another factor that is shaping the future of M&A is the increasing emphasis on ESG (environmental, social and governance) issues. As these issues are incorporated into the agendas of more CEOs they will likely drive M&A including the purchase and sale of assets to reduce their environmental footprint.
The M&A landscape is constantly changing as companies seek partners who are closer to the core goal of their business. M&A will continue to grow check out this site in industries that experience supply chain disruptions that are increasing and where vertical integration is required more than ever. This will include information and communication technology (ICT), medtech as well as fintech, food manufacturing and the automotive industry. Consolidation will also continue in industries that have been able to enjoy high valuations because of startup success. This includes areas such as artificial intelligence and augmented reality, as well as blockchain and telemedicine.