Mergers and acquisitions activity is set to pick up in 2024, following an uptick towards the end of 2023, with the number of deals having risen by 16% in Q3, the first increase since the start of 2022, according to PwC. M&As hit record figures in 2021, but there was a decline in 2022, and a further fall at the start of 2023.

The upward trend is set to continue in 2024, as market conditions improve, and companies continue to adjust to new consumer behaviours and wider global changes in order to secure longevity and future prosperity.

‘Three main factors underline our newfound optimism that we are entering a new phase of dealmaking in 2024: first, the recent improvement in financial markets, spurred by decelerating inflation and expected reductions in interest rates; second, the pent-up demand for (and supply of) deals; and third, the pressing strategic need for many companies to adapt and transform business models that is the very essence of dealmaking.’ - PwC

M&A deals take place for varying reasons. Some deals have occurred where a company has faced financial pressures, with business dipping due to customers cutting back on discretionary spending and rising costs. In these cases, a firm has had little choice but to be acquired by a larger company or private equity interest. Examples include Investec's acquisition by Rathbones, Toshiba's purchase by Japan Industrial Partners and Victoria Plum's takeover by AKH.

Others have forged alliances with erstwhile rivals to better withstand headwinds within their industry, with an example being the move by luxury brands group Tapestry to acquire Capri. Elsewhere, companies have looked to diversify their portfolio in order to boost their business by gaining new technology or talent, or expanding into new sectors or markets such as Admiral's acquisition of More Than's pet and home insurance business, Kering buying a stake in Valentino, Frasers Group’s takeover of Wiggle, and Majestic Wine's purchase of Vagabond wine bars.

Between 1 January 2023 and 15 April 2024, ALF reported on 239 M&A deals that were either confirmed or in the discussion stages. Retail accounted for the largest number (51), ahead of finance (28), publishing & media (17), entertainment & leisure (14), business & industrial (13), cosmetics & toiletries (12), clothing (11) drink (11), property (8) and sport (8). The list was rounded out by food (7), gambling (7), technology (7), pharmaceutical (6), retail services (5), automotive (3), luxury goods (3), home appliances (3), petfood (3), charities (2), leisure products (2), home improvement (1), education (1) and medical (1).

According to PwC, 60% of CEOs plan to make at least one acquisition in the next three years, and ALF will keep you up to date with all the deals that could affect your new business pipeline.

When a company is acquired, its marketing strategy is usually shaken up in order to ensure that returns on the investment are made. With the firepower of a bigger player, the purchased brand is likely to have a bigger marketing and advertising budget. However, there may be more factors in the sale process. If one or both of the brands involved in a merger or takeover is already a client of the other, there will be cross-selling opportunities and the option to expand on existing relationships. 

So which mergers & acquisitions should be on your radar? A break down of some of the best opportunities arising from recent deals  of this is available to ALF subscribers here.