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Key Findings and Takeaways:<\/strong>\u00a0<\/strong><\/p>\n According to global law firm CMS\u2019 2025 European M&A Outlook<\/a>, nearly two-thirds of dealmakers expect the level of European M&A activity to increase in the next 12 months, including 20% who say it will rise significantly. The Outlook was published on 12 September 2024 in association with financial data firm Mergermarket. This stands in stark contrast to last year\u2019s predictions when only 3% forecast a significant increase.<\/p>\n After a challenging couple of years for European M&A activity, H1 2024 demonstrated signs of recovery. Aggregate M&A deal values in the region totalled EUR 439bn, up 31% compared to the first six months of 2023, according to Mergermarket figures. However, transaction volumes were down over the same period, falling by 8% compared to H1 2023\u2019s 8,579 deal announcements.<\/p>\n Louise Wallace, Global Head of the CMS Corporate\/M&A Group<\/strong>, said: \u201cHaving announced fewer big-ticket deals in 2023 as they awaited greater certainty around interest rates, dealmakers appear to have reverted in 2024 to more concentrated activity in larger transactions \u2013 a sign of confidence returning gradually to the market<\/em>.\u201d<\/p>\n Although the CEE region has seen a slight decrease in deal volume by just 7%, the total value has risen drastically by 47%, reaching EUR 14.4 billion. However, the forecast suggests that the CEE region will experience only 8-9% growth in the next 12 months.<\/p>\n Even amid the war, M&A activity in Ukraine has shown growth, with investors paying closer attention to Ukrainian assets. As in the broader region, the TMT and energy sectors continue to dominate Ukraine\u2019s M&A market. A key example of this is a landmark deal led by the CMS team: the acquisition of lifecell and Datagroup by NJJ Holding, the investment firm of Xavier Niel.<\/p>\n DIGITALISATION AND OTHER DRIVERS<\/strong><\/p>\n Almost a fifth of respondents (17%) expect digitalisation to be the number-one driver of buy-side M&A activity in Europe over the next 12 months, but it is by no means the only major factor propelling dealmaking.<\/p>\n Whereas digitalisation dominated M&A strategies during the pandemic and in the couple of years immediately following the crisis, dealmakers today are quick to identify several additional key drivers of M&A, such as distressed opportunities (14%), mounting interest from overseas acquirers (also 14%). Such a plurality of motivating factors is indicative of an increasingly healthy deal market in Europe.<\/p>\n VALUATION GAPS<\/strong><\/p>\n Buyer and seller price expectations have emerged more clearly as the single biggest obstacle, with 24% identifying this as the primary hurdle to dealmaking in the next 12 months.<\/p>\n While it is normal for valuation gaps to emerge following market corrections or shocks, this sticking point appears to be taking longer to work through than in the past, as price discovery continues to be far from straightforward. With public market indices up over the past year (MSCI World, for example, was up by more than 20% in the year to the end of June 2024), company valuations have remained high despite higher financing costs in what remains an uncertain economic environment.<\/p>\n MIXED FEELINGS ON UK & IRELAND<\/strong><\/p>\n Respondents are split about the UK & Ireland\u2019s M&A prospects for the year ahead. In terms of anticipated growth, the region comes out on top by first and second choice votes, at 32% combined; yet it also emerges as the region that many respondents believe will see the lowest M&A growth, with 31% identifying it as their first or second choice in that regard.<\/p>\n MIDDLE EASTERN INTEREST<\/strong><\/p>\n Buoyed by sustained high oil prices, Middle Eastern investors have been looking to Europe for deal opportunities. Between 2016-2021, the average aggregate value of deals led by Middle Eastern bidders targeting assets in Western Europe was just under USD 6bn annually, according to Mergermarket data. In H1 2024 alone, Middle Eastern acquirers announced deals in Western Europe totalling almost USD 23.3bn.<\/p>\n This trend has not escaped our respondents\u2019 notice \u2013 42% say they have seen more Middle Eastern buyers in Europe\u2019s M&A markets over the past year.<\/p>\n DIVERSITY MATTERS<\/strong><\/p>\n Nearly all respondents (90%) describe a target company\u2019s diversity factor as an important consideration. However, there are regional differences. Respondents in the Nordic and DACH regions place a high emphasis on diversity, with 48% saying diversity is a crucially important factor. Meanwhile, only 13% of SEE and 9% of CEE dealmakers surveyed share this view.<\/p>\n OUTLOOK<\/strong><\/p>\n After a period of reflection in 2023, as European dealmakers absorbed the shocks of rapidly rising inflation and elevated interest rates, the signs for 2024 so far are that M&A activity across the region is shifting back into a higher gear.<\/p>\n Dr Malte Bruhns, Global Head of the CMS Corporate\/M&A Group<\/strong>, added: \u201cWhile interest rates remain high relative to expectations, there is a consensus that inflation is now mostly under control and that systemically important central banks in Europe will opt for at least one or two more rate cuts before 2024 closes. Should this happen, one of the major impediments to M&A that has prevailed longer than many had expected \u2013 namely, buyer and seller valuation gaps \u2013 may begin to abate. Even absent significant cuts, the sense that interest rates have peaked provides more certainty to dealmakers when underwriting transactions<\/em>.\u201d<\/p>\n Read the full CMS European M&A Outlook 2025<\/strong> here: https:\/\/cms.law\/en\/int\/publication\/cms-european-m-a-outlook-2025<\/a><\/p>\n -END-<\/p>\n For further information, please contact:<\/strong><\/p>\n Darina Gordienko<\/p>\n E: darina.gordienko@cms-cmno.com<\/a><\/p>\n T: +38044 391 3377<\/p>\n Notes to editors:<\/strong><\/p>\n Methodology<\/u><\/strong><\/p>\n In Q2 2024, Mergermarket surveyed senior executives from 240 corporates and 90 PE firms based in Europe, in the Americas and in Asia-Pacific about their expectations for the European M&A market in the year ahead. Among the 330 executives interviewed, 70% are headquartered in Europe, while the remaining 30% are split equally between the Americas and Asia-Pacific. 92% of all respondents have been involved in an M&A transaction over the past two years and 95% plan to undertake an M&A transaction in the coming year.<\/p>\n All responses are anonymous, and results are presented in aggregate.<\/p>\n About CMS<\/strong>: Founded in 1999, CMS is an integrated, multi-jurisdictional organisation of law firms that offers full-service legal and tax advice. With more than 84 offices in 47 countries across the world and more than 6,300 lawyers, CMS has long-standing expertise both in advising in its local jurisdictions and across borders. From major multinationals and mid-caps to enterprising start-ups, CMS provides the technical rigour, strategic excellence and long-term partnership to keep each client ahead in its chosen markets.<\/p>\n The CMS member firms provide a wide range of expertise across 19 practice areas and sectors, including Corporate\/M&A, Energy & Climate Change, Funds, Life Sciences & Healthcare, TMC, Tax, Banking & Finance, Commercial, Antitrust, Competition & Trade, Dispute Resolution, Employment & Pensions, Intellectual Property, Real Estate, Consumer Products and Hotels & Leisure.<\/p>\n For more information, please visit: www.cms.law<\/a><\/p>\n\n