Deloitte M&A Index 2024 Q3
The number of European transactions increased by 5.3% in the second quarter. The third quarter will see further growth, predicts Deloitte's M&A Index.
In the second quarter of this year, there was an increase in the number of transactions on the M&A market. Their number increased from a total of 2,697 recorded in the first quarter of this year to 2,841, which represents an increase of 5.3%. The total value of trades made over the past 12 months has also increased - specifically from the original $467 billion to $576 billion. The positive development is due to falling inflation, lowering euro interest rates and the generally positive situation on the stock markets. Improving economy could lead to further increases activity on the M&A market in the remaining months of this year.
Together with the recovery of European economies and the growth of market confidence, the optimistic mood is starting to strengthen. With regard to these factors, Deloitte expects The M&A Index for Q3 saw a further slight increase in announced transactions to 3,025.
"The first half of this year has brought positive trends in the area of mergers and acquisitions. There has been an increase in the number of transactions, demand is growing, and companies with quality assets for sale are also appearing on the market. Price expectations of sellers and buyers now seem to be more balanced than in the previous period. I expect that companies will continue to compete in a competitive market in the coming months for the growth and development of their business models through acquisitions, and at the same time, unrealized exits of private equity firms will gradually begin to be released," says Jan Brabec, Partner in the Financial Advisory function of Deloitte.
In the second quarter of 2024, according to Capital IQ, 17 transactions took place in the Czech Republic, mostly small to medium-sized. For example, BHM sold a majority stake in the construction and engineering firm Block Group to private equity firm CEIP. Genesis Growth Equity I sold Homecare Holding, a home care business that it had been developing for four years, to Penta Hospitals. HP Tronic has agreed with Genesis Private Equity Fund III to buy a quarter of its shares, making it the sole owner of electronics retailer Datart. Last but not least, Aricoma, part of the KKCG investment group, acquired KCT Data, while the Thein investment group acquired Your System, a provider of IT services primarily for the public sector.
"The European M&A market has recovered slightly over the past two quarters, mainly due to attractive corporate valuations, a decline in euro interest rates and a generally improving macroeconomic environment. These factors could lead to an increase in activity in the second half of this year, despite the recent turbulence on the stock markets," says Miroslav Linhart, Partner in Charge of Financial Advisory at Deloitte.
In the Czech Republic, investment activity continued to be hampered by high interest rates, which the CNB started to gradually reduce at the end of 2023. The worst impact on economic development is weak external demand, especially from Germany, with which the Czech economy is closely linked. The economic recovery has been lacklustre so far. GDP increased by 0.2% in Q1 compared to the previous quarter, or 0.3% year-on-year. The main support was increased demand from households, which was supported by real wage growth. On the other hand, the weaknesses are corporate investment and a decline in inventories. The difficult situation in the corporate sector is also pointed to by information on a year-on-year decline in industrial production by 0.7% for January to April and construction production by as much as 3% in the same period. The Purchasing Managers' Index and the CZSO's confidence indicators do not show that the situation will improve in the coming weeks. The main positive change is the end of high inflation.
You can download the new Deloitte M&A Index 2024 Q3 here.
