Expect cautious M&A activity to persist in 2024: WTW
Expect cautious approach to merger and acquisitions (M&A) in 2024 as the gaps in buyer and seller expectations and volatile macroeconomic conditions continue to complicate deal completions, global broker WTW has predicted.
Factors such as rising interest rates, geopolitical tensions, and supply chain disruptions are challenging the deal-making environment, with hawkish monetary policies further limiting leverage opportunities, according to WTW’s global transactional risks review and outlook.
Despite a slowdown in inflation in many large economies, the overall M&A climate is expected to remain subdued, with only a “cautious” uptick in activity anticipated through 2024.
The review highlights that insureds who recognise the comparative strength of their positions will begin to push back against conservative insurers with regards to exclusions and the coverage of additional and newly emergent warranties.
M&A activity has seen a steady decline in mega deal volume since 2020, a trend expected also to continue into 2024 despite a slight increase in activity in Q1 compared to the previous year, WTW said.
Jeremy Wall, global head of FINEX, said: “For transactional risk insurance markets this has meant that provided they suffer no exposure to perceived problem jurisdictions or industries, insureds retain an excellent position with both pricing and risk appetite settling well off of historic averages in the favour of policyholders.”
“The report suggests that in 2024 a tentative approach will continue as buyers, both private equity and corporate, with considerable cash reserves will keep a keen eye on value and adjust expectations of a sudden return to a bull market or the distress jamboree which some market commentators had been predicting last year.”
Alex Keville, head of M&A and private equity, global FINEX, added: “Data plays an essential role in the effective use of risk transfer solutions. WTW remains at the forefront in leveraging connected global insights and analytics to stay ahead of market trends. As a trusted global adviser, we emphasise the importance of consulting our experts, as early as possible in the deal cycle, to help navigate the complexities of M&A transactions ensuring informed decision-making and the enhanced ability to identify and mitigate risks using products such as transactional risk insurance.”
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