Investec expects upswing in 2024 M&A activity

The mergers and acquisitions sector is poised for a significant upturn in 2024 despite uncertainties stemming from macroeconomic and geopolitical challenges. Factors such as the deceleration of inflation, a backlog of deal demands, and the strategic imperatives for diversification and innovation are expected to fuel this resurgence. A recent interview on CNBC Africa with Marc Ackerman, Head of Corporate Finance at Investec, shed light on the current landscape and future projections for M&A activity in 2024. The discussion kicked off with a highlight of Canal Plus's non-binding offer, setting the stage for foreign direct investment and increased competition in the streaming industry. Ackerman noted the potential spillover effects of such major deals within the media sector, signaling a broader trend of consolidation and heightened activity across various industries. The conversation then pivoted to the broader outlook on mergers and acquisitions, indicating a shift towards inorganic growth strategies as companies navigate a low-growth environment and seek to expand their market presence. With a projected decrease in interest rates and improved macroeconomic stability, Ackerman foresees a rise in M&A transactions as organizations capitalize on strategic opportunities. Geopolitical considerations also play a vital role in shaping M&A dynamics, as the complexities of global tensions impact capital flows and deal structures. Regional-specific challenges, such as exposure to high-risk jurisdictions, add layers of complexity to transaction evaluations, with acquirers increasingly prioritizing risk assessment and mitigation. Amidst the evolving landscape of global competition and technological advancements, the discussion delved into the implications of the 'streaming wars' on M&A activities. Ackerman emphasized the growth potential in the African market, particularly in expanding streaming penetration and catering to diverse content preferences, highlighting opportunities for subscriber base growth and enhanced market engagement. Looking ahead to 2024, Ackerman predicts a rebound in M&A volumes following a decline in the previous year, with a projected increase of 10% to 15% globally. Sectors such as renewables, digital infrastructure, and consumer retail are identified as key areas of interest, driven by emerging trends and strategic imperatives in response to market dynamics. The interview concluded with insights into South African companies' appetite for international expansion and diversification, as well as the valuation attractiveness of local firms compared to their global counterparts. Ackerman emphasized the need for cautious yet strategic approaches to seizing opportunities in the evolving M&A landscape, underscoring the importance of informed decision-making and proactive market positioning. As the M&A sector braces for a resurgence in 2024, fueled by a convergence of economic, strategic, and geopolitical factors, industry players are gearing up for a dynamic and transformative year ahead, marked by increased deal activities, sectoral realignments, and strategic partnerships.