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After high hopes for an upturn in dealmaking at the beginning of the year, M&A markets experienced a significant slowdown in the first half of 2024 due to heightened uncertainty. However, M&A activity is expected to recover, albeit unevenly across sectors. The need for deals remains strong, driven by strategic and economic pressure, particularly in the private equity sector.
Corporates are also increasingly using M&A to drive growth and adapt to rapid change, such as the AI revolution. Despite the current low level of activity, underlying demand and deal readiness suggest a likely resurgence in the coming months as more quality assets come to market. Behind the scenes, seller activity is picking up, with sale preparations and vendor due diligence already underway.
“The critical need for companies to transform and innovate business models drives M&A activity, acting as a catalyst for growth. M&A enables repositioning, expansion, and long-term success, meeting motivated sellers, particularly from the PE sector.”
Marc SchmidliPartner, Deals Leader, PwC Switzerland
Why transactions are becoming more imperative
Businesses need to engage in mergers and acquisitions (M&A) to achieve strategic and economic objectives – a need that is driven by four main factors:
Take aways for dealmakers
Longer-than-expected high interest rates are increasing acquisition costs and may depress deal values, while recently high valuations and political uncertainty due to upcoming elections in major economies are delaying corporate decision-making. In addition, ongoing global tensions such as the war in Ukraine and strained US-China relations are further complicating the M&A landscape.
In this environment, both buyers and sellers need to be flexible in the coming months and consider alternative deal structures such as partnerships, alliances, rolling equity stakes, earn-outs, and other innovative capital structuring methods.
Some key insights for Switzerland
Sector-specific growth: The pharmaceutical, technology, and financial services sectors are poised for significant M&A activity. Companies in these sectors are seeking to strengthen their innovation capabilities, consolidate operations, and expand their market presence, driving a number of acquisition deals.
Digital transformation and sustainability: Swiss companies are increasingly focusing on digital transformation and sustainability, which is leading to strategic acquisitions. Companies are targeting firms with advanced technologies and sustainable practices to enhance their competitive edge and align with evolving market trends.
Stable economic and regulatory environment: Switzerland’s stable political climate, strong regulatory framework, and investor-friendly policies continue to attract both domestic and international investors. This stability provides a supportive environment for M&A activities, ensuring smooth transaction processes and favourable investment conditions.
Resilience amid global uncertainties: Despite potential economic uncertainties worldwide, Switzerland’s robust economy and strategic positioning in the global market are expected to maintain a positive M&A outlook. The country’s ability to overcome economic challenges and maintain investor confidence will be key to driving M&A momentum in the second half of 2024.
Visit our blog post for further insights into the development of dealmaking and our predictions for its future direction.
Gain an in-depth understanding of the special dynamics in the M&A landscape in 2024 with our blog series. Explore our detailed analysis and predictions on dealmaking trends and strategies across sectors and get the knowledge you need to navigate this transformative year.
“The daunting combination of high interest rates, current valuations, and political uncertainty has been a showstopper for many deals. Nevertheless, the strategic need for M&A continues to grow stronger, creating pent-up demand which will be unleashed as uncertainties resolve.”
Industry takeaways for Switzerland - developing
Learn more about the key trends driving M&A activity globally in 2024. For potential investment hotspots check out our global industry-specific takeaways below.
And how about the situation in Switzerland? In the next few weeks, our industry experts will be sharing their views and expectations of M&A trends in Switzerland ‒ so please stay tuned.
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