9 Finance Monthly. The Monthly Round-Up tion in Europe will create dealmaking opportunities, with 93% stating that ESG considerations constitute a significant element of their organisation’s due diligence. Indeed, 85% expect greater ESG scrutiny in M&A deals over the next three years. DEAL DRIVERS Similar to findings from last year’s survey, dealmakers continue to identify undervalued targets (36%) and turnaround opportunities (35%) as the primary catalysts driving M&A activity in Europe for the upcoming year. This trend is hardly unexpected, considering the decline in valuations of public companies over the past 18 months. THRIVING SECTORS More than a third of dealmakers predict the TMT sector (37%) and the energy sector (36%) will experience the most significant surge in dealmaking across Europe. In contrast, 42% believe that the pharmaceuticals, medical and biotech (PMB) sectors will exhibit the slowest growth. Whilst 68% of dealmakers favoured the TMT sector as one of their top two choices in the previous year, the recent decline might partially stem from the notable revaluation of technology stocks over the past 12 to 18 months. However, the enduring prominence of the TMT sector underscores investors’ unwavering confidence in future expansion and companies’ need to acquire technology as various industries continue to emphasise digital transformation. An illustrative instance of this trend emerged in the first half of 2023, with Deutsche Börse’s €4 billion acquisition of Danish data provider SimCorp – a venture that highlights the exchange group’s pursuit of reinforcing its data analytics prowess for the newly established investment management solutions arm. REGIONAL DIFFERENCES Expectations for M&A activity across various European regions have undergone significant shifts compared to the previous year. Looking ahead to the next 12 months, dealmakers project a noteworthy surge in dealmaking within the UK and Ireland, which now holds the foremost position on the list by a considerable margin, with nearly half (47%) of respondents placing it in their top two preferences. In contrast, the UK and Ireland occupied the sixth spot last year, amassing merely 19% of the top-two votes. Iberia and Benelux jointly claim the second spot, with 29% of decision-makers ranking them amongst the top two regions for projected M&A growth in the upcoming year. Conversely, the regions of Central and Eastern Europe (CEE) (38%) and Italy (30%) represent the areas where the largest subsets of dealmakers expect the slowest growth in M&A activity. As the European M&A landscape continues to evolve, industry stakeholders remain vigilant in navigating these shifting dynamics, aiming to seize opportunities whilst effectively managing challenges. The path forward necessitates a delicate balance between economic conditions, regulatory developments and evolving market sentiments. Dr Malte Bruhns, Global Head of the CMS Corporate/M&A Group, added: “Higher inflation costs and a more uncertain economic outlook have made buyers more prudent about the price that they are prepared to pay for businesses, whilst sellers have yet to adjust their expectations. That being said, there are plenty of reasons to be optimistic about the prospects for European M&A over the medium and long term, including a continued appetite for TMT deals, strong inbound investment and the growth of private capital in Europe, which will keep deals moving along.” European M&A Trends 2019 - Q2 2023 Number of deals Deal value EURm
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