Swiss M&A market with fewer mergers and acquisitions
With 484 mergers and acquisitions, 25% fewer transactions were completed last year than in 2022. This means that M&A activity has moved back towards the long-term average.
"The lower number of deals compared to the two previous record years is primarily due to higher interest rates and increased economic uncertainty," explains Timo Knak, Head of Deal Advisory at KPMG Switzerland. The sharp drop in deal volume by almost half, from USD 138.5 billion in 2022 to USD 72.2 billion in 2023, is also striking. KPMG Deal Advisory expects a slight upward trend for the current year.
Industrial goods sector with greatest activity
20% of all transactions in 2023 were in the industrial goods sector, which recorded 98 transactions and a deal volume of around USD 6 billion. This means that for the first time since the start of the coronavirus crisis, the industrial sector has overtaken the telecommunications, media and technology (TMT) sector as the second most active sector on the M&A market. With 76 transactions and a deal volume of just over USD 1.1 billion, the TMT sector recorded significantly less activity in 2023 than in the previous year with 124 transactions and a volume of almost USD 15 billion. As in the previous year, the pharmaceutical and life sciences sector followed in third place with 72 deals and a volume of almost USD 25 billion.
The lower proportion of mergers and acquisitions involving private equity is noteworthy: while private equity companies were involved in around a third of transactions in previous years, this figure was less than a quarter in 2023. In addition, the transaction volume of this investor group is at its lowest level for ten years at USD 4.8 billion (previous year: USD 35 billion). "Many private equity investors focused on optimizing their existing portfolios last year due to the difficult economic environment. In addition, the price expectations of sellers and buyers often did not match, which is the basic prerequisite for an active M&A market," explains Timo Knak.
CS takeover among the most important Swiss M&A transactions
The ten most significant mergers and acquisitions accounted for USD 51 billion of the total transaction volume in 2023, or around USD 70%. The takeover of Credit Suisse by UBS attracted the most public attention. However, this was modest in terms of size at around USD 3.5 billion. The largest transaction was the sale of the agricultural company Vittera by Glencore to the agricultural group Bunge for USD 17.3 billion, Glencore took third place, this time on the buyer's side for Teck Resources' steel coal division Elk Valley Resources for around USD 6.9 billion. This transaction followed a failed takeover attempt by Glencore for the entire Teck Resources at the beginning of the year, when an offer of just under USD 31.9 billion was made for the Canadian mining company.
Swiss companies are busy buying abroad
Contrary to popular belief that Swiss companies are increasingly being acquired by foreign companies, the data shows a different picture: Swiss companies acquired foreign companies or company shares in 216 cases (45% of all transactions), while foreign companies acquired Swiss companies or company shares in 118 cases (24% of transactions). With 86 deals, national transactions (Switzerland/Switzerland) accounted for just under a fifth of all transactions. Around 13% of all transactions are attributable to foreign transactions with Swiss sellers (64 deals).
Outlook: IT increasingly the focus of mergers and acquisitions
For the current year, Timo Knak expects both M&A activity and the transaction volume to increase slightly again. "M&A is still a strategically important topic," says Knak. In the expert's eyes, however, the complexity of mergers and acquisitions will continue to increase - not only due to increased sustainability requirements, but also in light of technological developments. "Companies' IT landscapes are becoming increasingly complex, not least due to the rise of artificial intelligence. This development is also having an impact on the transaction business," says Knak. "On the one hand, the importance of IT due diligence prior to a transaction is increasing in order to identify risks such as system vulnerabilities and data protection breaches at an early stage. On the other hand, those involved in both takeovers and spin-offs must ensure that the integration or spin-off process does not cause any disruption to critical business processes. Effective management of these IT aspects is therefore crucial to avoid unpleasant surprises."
Source: www.kpmg.ch
