The state of the M&A market now and in the future

Corporate transactions typically reflect the current state of the economy and the strategic decisions of companies. The challenging operating environment in the market has continued during the autumn, especially due to the testing interest rate environment, high inflation and hazy future prospects. This year will continue to be challenging, but next year the economy is expected to take an upward turn. In terms of corporate transactions, a positive driver is especially the stabilised interest rate outlook, which contributes to improving buyer confidence and is likely to be reflected in increasing transaction volumes also in the long term. 

As a whole, the M&A market has fared better than was feared in the bleakest scenarios. Transactions are active, but the size category of corporate transactions are showing a downward trend. In recent years, investors’ interest in unlisted companies has increased in Finland, and despite the current challenging market environment, the M&A market is still quite active.  Especially the Nordic mid-market has proven to be remarkably resilient, and transactions are still taking place continuously. Investor interest still seems strong, and in the current market, correctly targeted acquisitions are seen as an opportunity to strengthen the long-term competitiveness of companies.

There are currently clear sectoral differences in the M&A market, and, for example, sectors related to construction or consumer business do not attract as much interest as before due to the negative economic outlook. On the other hand, on the buyer side, the liquidity situation is still at a good level and Nordic buyers see the market as attractive in the longer term. A key change has been that investors have moved to a slightly smaller size category in terms of transactions and the focus is now particularly on profitability.  Growth companies investing in strong growth, or with a negative cash flow or solely based on future return expectations are seen as a more challenging investment in the current interest rate environment than before. High-quality and highly profitable companies are still of great interest to investors in the Nordic countries, and there is currently even fierce competition for good investments. In addition, banks are still prepared to finance high-quality acquisitions. 

Eversheds was highly successful in terms of completed acquisitions in the first nine months of this year. According to Mergermarket’s acquisitions listing, we successfully tied for second place in Finland with 27 completed transactions. The number of transactions is the result of our long and determined work on our service model built around the owner strategy, in which we aim to create added value for our customers, with an emphasis on the financial aspect of the transactions and an in-depth understanding of the transaction's commercial objectives and the opportunity to generate added economic value. Despite the challenging outlook on the market, we are cautiously optimistic about next year and believe that, especially in the second half of 2024, activity in the M&A market will increase.