The landscape of crossborder mergers and acquisitions (M&A) is continually reshaped by global economic shifts. As an advisor specializing in cross-border transactions and multinational company advisories, I have observed the distinct impact of these changes, especially from the Indian perspective.
U.S.-China Trade Tensions
The heightened scrutiny and complexity in transactions involving U.S. and Chinese companies are primarily due to expanded review processes by the Committee on Foreign Investment in the United States (CFIUS) and stricter Chinese regulations on outbound investments. This scenario demands more rigorous due diligence and a reevaluation of investment strategies, particularly affecting deals in the technology and manufacturing sectors.
Brexit and its Aftermath
Brexit introduced new challenges in M&A that involve the UK and EU entities, requiring navigation through altered tariff regimes and regulatory approvals. The UK’s National Security and Investment Act 2021, for example, has required enhanced scrutiny in respect of foreign investments, impacting deal structuring and strategic planning.
Regulatory Environment
Understanding the intricate web of Indian laws and approvals is crucial for smooth M&A transactions. The regulatory landscape in India, while improving, still has hurdles that require careful planning and expert navigation.
Opportunities amidst Challenges
India offers numerous opportunities in the evolving global scenario. Initiatives such as ‘Make in India’ and the country’s large consumer base make it a lucrative market. Success in cross-border M&A here hinges on adapting to local nuances while aligning with global standards.
The Road Ahead
Adopting a strategic approach is vital for navigating global economic shifts. Companies must exercise diligence, adaptability, and a thorough understanding of legal landscapes, both globally and locally.
The global mergers and acquisitions (M&A) landscape is poised for dynamic changes over the next five years. Drawing from recent reports and forecasts, this article aims to shed light on emerging trends, promising jurisdictions, and key industry sectors.
Global M&A Trends (2023-2028)
Market Performance Notwithstanding the decline in deal volumes in the distressed global M&A market since the beginning of the year 2023, a consistent pattern of stable deal value annually is evident, with the year 2021 being an outlier. While the number of deals over $25 million fell significantly, ongoing soft-to-serious deal conversations suggest that companies are actively scrutinizing portfolios in response to recent startling developments and structural changes such as sustainability and AI.
Key Jurisdictions for M&A
Americas With over half of global M&A activities, this region, particularly the United States, remains a key player. The focus is likely on technology, media, and telecommunications (TMT), and healthcare sectors.
Industry Sectors to Watch
Insurance Broker Sector expected to see strong M&A activity, influenced by inflation and other economic factors. ESG Core CompetencesAn uptick in M&A activity focusing on acquiring ESG capabilities is likely, especially among US asset managers looking to acquire assets from European asset managers for diversification and growth.
In a nutshell
The impact of global economic shifts on crossborder M&A is significant but navigable. With informed strategies and expert guidance, companies can leverage these challenges into opportunities, especially in markets like India. The evolving global economic landscape underscores the need for agile and informed approaches in cross-border M&A. The next five years in the global M&A landscape are set to be shaped by consistent, yet cautiously optimistic, activities, with specific regions and sectors being unquestionably the key areas of focus.
The Americas and APAC regions will likely continue leading global M&A activities, with significant movements expected in the TMT (Technology, Media, and Telecommunications), healthcare, insurance, and financial services sectors. The growing importance of ESG (Environmental, Social, and Governmental) responsibility is poised to be a major driver in future M&A strategies.
Sidharrth Shankar is an M&A Partner at JSA, Advocates & Solicitors. Views are personal