ReachX Newsletter July
We are observing a real soft landing in the deal environment:?sellers have started adjusting their valuations to meet buyers, enabling dealmakers to tackle an otherwise difficult market.
Last year, mergers and acquisitions experienced a hard reset. The combination of high inflation, rising interest rates, a still-tight labor market and stricter borrowing conditions made it more challenging for firms to close deals.?
Despite these headwinds, roughly 10,625 M&A deals closed across the globe in Q1 for an estimated $993 billion (1). While this marked a decline of 7% in the number of deals and 10% in value, this is a solid performance when compared to the quarterly figures seen between 2017 and 2019.
In addition, the S&P recent rally albeit led by the magnificent 7 (Alphabet, Amazon, Nvidia, Tesla, Meta, Microsoft, Apple) is setting the scene for a broader appreciation in market values on the back of decent results from US companies.?The growth in the second quarter at 2.4% in the US also surpassed expectations and was in some respect, very healthy, driven by corporate investments and still powered by resilient consumption while inflation slowed down.?
?This makes me more optimistic about the deal environment, as we are reaching a new equilibrium between growth and inflation.?
Of course, not to say the environment is benign, given the overhang from geopolitics and new tech trends like AI accelerating transformation at major companies.?Fundraising is still challenging but the appetite of buyers is clearly back to normal.?(1) Source Pitchbook data.
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