CMS European M&A Study 2024: Optimism for M&A amid evolving market trends

It's been a wild ride for mergers and acquisitions (M&A) around the world this year. Yet, despite the turbulence, we are seeing plenty of reasons to be hopeful about M&A activities in Europe for 2024. The resilience shown amidst economic and geopolitical ups and downs is truly inspiring. Our Study dives into an impressive 559 M&A deals that CMS advised in 2023 and reports on deal trends and current market standards on risk allocation. 

Key Findings and Takeaways

• Resilient M&A Market: despite challenges, 2023 saw a slow but resilient M&A market. The outlook for 2024 remains optimistic.
• Pricing Structures Shift: notable decrease in PPAs and earn-outs, indicating a shift towards more predictable deal terms. However, smaller transactions show continued pricing uncertainty.
• ESG Considerations Grow: ESG due diligence is on the rise, signalling growing interest in sustainable and responsible investment. Expect growth due to increasing regulatory and reputational demands.
• Rise in Strategic Investments: a significant presence of strategic investors both as buyers and sellers, indicating a strategic reshaping of business portfolios to adapt to market changes.
• Risk Allocation Consistency: the period for operational warranties is narrowing but stays within 12-24 months, with liability caps under 50% of the purchase price.
• W&I Insurance Use Steady: use of W&I insurance in large European deals remains stable, with the UK leading.
• Impact of Geopolitical and Economic Factors: geopolitical and economic challenges are impacting deals but the Study notes a rebound in debt market confidence and potential boosts from election cycles.

Special features:

• CMS European / US risk allocation comparison: headline analysis of the differing risk allocation on standard issues in European and US M&A.
• CMS European regional differences: analysis of issues peculiar to one or more of the seven European regions covered.
• CMS deal size analysis: data against three different deal values: deals <EUR 25m; deals from EUR 25m to EUR 100m; and deals >EUR 100m.
• Regional commentary: special Commentary from CMS offices in LATAM, China, Asia Pacific and Middle East.
• Historical comparison: 2023 data compared against both 2022 and the previous 12-year average.

We hope the CMS European M&A Study 2024 will again be a useful guide for you in a more and more challenging investment climate.

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