M&A and PE European trends in Q3

| Insights

Andersen’s European Corporate and M&A team has published a report analyzing the trends in the European mergers and acquisitions and private equity markets for the third quarter of 2024.

Paola Pellegrini, director at Andersen Italy and head of the firm’s Debt Advisory division, released an interview on how companies are interacting with alternative financing.

Inflation, high interest rates, and geopolitical issues undermine the M&A market

The European mergers and acquisitions (M&A) market faced significant challenges in the third quarter of 2024, with a significant decline in both the volume and value of deals compared to the same period in 2023. Several macroeconomic factors contributed to this downward trend, including persistent inflation, high interest rates, and geopolitical uncertainties, particularly due to the conflict in Ukraine and ongoing disruptions in energy supply. Additionally, the third quarter typically tends to slow down seasonally due to the holiday period; however, this year’s decline was more pronounced as companies became cautious about initiating new deals in an uncertain economic environment.

Technology and energy: the sectors that work

Despite the overall slowdown, some sectors such as high-tech and energy remained relatively active, and the industrial and financial sectors still achieved high transaction values, albeit with a lower number of deals. In the third quarter of 2024, the United Kingdom led the market with deals worth 30.64 billion euros, significantly outperforming other European countries. The results of Germany and France followed, highlighting the strategic importance of these countries in the European M&A landscape.

Overview of M&A transactions in Q3

Total M&A activity in the third quarter reached approximately 132 billion euros with 3,340 deals, marking a decline compared to previous quarters. As mentioned, the United Kingdom continues to be the leading market with 30.64 billion euros worth of deals, significantly outperforming other European countries. Germany follows with 20.82 billion and France with 14.31 billion. The three countries alone account for a significant share of the overall activity. Spain and the Netherlands also achieved good results and contributed to the total, with the former recording approximately 12.88 billion euros, mainly through deals in the financial sector, and the latter with 9.18 billion, primarily in the commodities sector. The sharp decline compared to the result of 179 billion recorded in the second quarter highlights the ongoing challenges for the European M&A market, which, undermined by geopolitical uncertainty, is leading many companies to adopt a more strategic and conservative approach to their investment decisions.

Private Equity results in the third quarter of 2024

As for the Private Equity sector, the European market has proved to be volatile but resilient. Again, the United Kingdom leads the ranking in terms of deal value, while the financial services sector has emerged as one of the most sought-after, driven by significant investments in fintech and digital banking. This increase in financial transactions highlights the ongoing digital transformation of the sector, with investors targeting companies ready to make innovative choices in an evolving financial landscape. The quarter peaked in July, followed by a moderate slowdown in August and September. Despite these fluctuations, investor interest remained high, particularly in sectors with high growth potential such as financial services and healthcare. Private equity firms are increasingly focusing their investments on sectors that can achieve long-term growth and development, seeking to position themselves to capitalize on future opportunities in a changing economic context.