M&A: trends and opportunities for the internationalisation of companies
In 2021, the Italian M&A market recorded significant growth, registering record levels since 2008, for example: in the number of transactions and related financial values. The sector was driven, in particular, by the completion of processes temporarily interrupted or slowed down by the pandemic emergency, the significant liquidity available on the market (from both private equity funds and the banking system) and internationalisation processes.
The outlook for the current year is for a slowdown in the market: the data for the first half of 2022 show a 13% decrease in the number of completed transactions compared to the same period of 2021 worth an equivalent value decreased from 52 billion to 30 billion euros. Clearly, the complex macroeconomic and geopolitical scenario, caused by the Russia-Ukraine conflict (and its impacts on energy and raw materials), slowdowns in logistics chains, and inflation levels and monetary policies adopted by central banks aimed at containing price increase, is expected to continue also in the second half of 2022.
The mid-market segment is suffering to a lesser extent from this scenario, thanks mainly to the role of foreign investors who recorded 191 transactions in the first half, up 10.5% compared to 2021 worth a value of 10.4 billion euros.
The M&A market represents an opportunity for entrepreneurial groups with development strategies to be achieved also through extraordinary finance operations. There's a new return to a more buy-side-oriented market, which is more interesting for acquiring companies, after a long period characterized by higher M&A deal price levels (and therefore more sell-side-oriented)
The slowdown in the M&A market, as well as in global economies, represents an opportunity for entrepreneurial groups with development strategies to be achieved also through extraordinary finance operations, in the decrease of implicit multipliers and therefore prices in M&A deals. Now, as a result, the stock markets have already discounted (albeit not completely) the current scenario, with a return to a more buy-side-oriented market (that is, more interesting for buying companies), after a long period characterized by higher M&A deal price levels (and therefore more sell-side-oriented).
Controlled acquisition prices, a high level of so-called dry powder, i.e. liquidity available to operators and which still needs to be placed on the market, could allow SMEs with solid expansion plans to more easily carry out growth operations for external lines. By way of example, internationalisation transactions (such as the acquisition of companies abroad) could increasingly be a response available to companies to face logistical difficulties, in addition to representing a tangible opportunity to enter or strengthen their positioning in foreign markets where to acquire additional market shares or benefit from economies with prospects for better growth rates than in the domestic market. With this in mind, among the most recent deals, there is the one carried out by the Riello Elettronica Group, which acquired the majority share of the French company ATM Distribution. Sella Corporate & Investment Banking was the exclusive financial advisor in this deal (read the news).
Traders such as private equity funds thanks to the high liquidity available and benefitting from more favourable prices, will also be able to provide companies with resources to support their development at a national and international level through the implementation of buy&build strategies. Finally, it is worth notice that the ramp up in Italy of some phenomena related to digital transformation, Fintech, environmental sustainability and more in general to ESG factors will have an increasing impact on the M&A market through the implementation of capital raising transactions and aggregations.