In the Netherlands, the M&A market is expected to experience a rise in activity in 2024, following a surprisingly robust performance in 2023. Although macroeconomic factors, geopolitical tensions and waning investor confidence impacted deal volumes and values—especially the number of megadeals—the midmarket maintained a steady flow of transactions.
Substantial opportunities for growth and success
The lower M&A activity in 2023 has resulted in pent-up demand from buyers and a buildup in seller assets. The 2024 outlook for private capital is optimistic, with the expectation of significant investment from the ample funds raised in recent years. Private capital is poised to remain a key driver for M&A, alongside further business consolidation. ‘Now is the time to seize the deal opportunities in the Netherlands', says Remco van Daal, Deals Leader at PwC Netherlands. ‘The upcoming year presents substantial opportunities for growth and success in the M&A market. A resurgence of large and midmarket deals is anticipated, with considerable dry powder ready for investment. Strategic moves made now can fortify market positions and maximise M&A opportunities.’
Reinvent your business model
The evolving landscape necessitates that dealmakers adapt to the shifting conditions and heightened expectations accompanying the M&A rebound. To stay ahead of the competition, it is imperative for companies to re-evaluate their strategies and reinvent themselves.
Dealmakers must proactively assess risks and opportunities and be prepared to pivot to uncover new sources of value. CEOs who incorporate a broader perspective on strategy, new business models, operations, workforce, sustainability, tax, risk, and regulatory compliance into their value creation approach and business transformation efforts, will be best positioned to accelerate their strategic objectives and achieve sustainable growth.
PwC's CEO Survey findings underscore the imperative for business transformation to maintain competitiveness. Global megatrends such as climate change and technological disruption are driving the need for business reinvention. Companies must adapt and innovate to keep up with these changes and ensure their long-term success. CEOs recognize that technological advancements, changing consumer preferences, and government regulations will significantly impact their companies in the coming years.
The PwC Report ‘Transact to Transform’ confirms this, revealing that most respondents consider transactions as the optimal way to keep pace with rapid market changes. Additionally, a considerable number of CEOs intend to use transaction activity to achieve technology-related objectives for their businesses. To succeed in the evolving M&A landscape, companies must embrace transformation. Adapting business models to rapidly changing market conditions and technological advancements is essential for survival.
Technology plays a crucial role in transformations and M&A
According to PwC's CEO Survey, technology is a key enabler for CEOs looking to address inefficiencies and drive business transformation. The adoption of generative AI, for instance, is improving efficiency by optimising employees' time at work. In the realm of dealmaking, AI is poised to revolutionise the process by potentially accelerating deal preparedness, streamlining transactions and increasing the chance of successful deals. As a powerful tool in the synergy of transformations and M&A, technology enhances every stage of the process, providing the necessary insights, capabilities, and efficiencies for success. Reflecting this, seventy per cent of respondents from PwC's Report ‘Transact to Transform’ are likely to leverage transaction activity to achieve technology-related goals for their businesses.
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Navigating uncertainty
Many uncertainties continue to cloud the outlook for 2024, including economic volatility, geopolitical tensions, increased regulatory scrutiny, supply chain disruptions, and upcoming elections in several countries. However, CEOs have learned a lot over the past few years, including how to navigate amid uncertainty, and are showing greater willingness to take calculated risks and find solutions to prepare their businesses for the future. Deals are seen as a way to mitigate these risks and ensure safe operations. By strategically partnering with other companies, businesses can enhance their resilience and navigate these risks more effectively. We believe this will extend to developing an M&A strategy that will support their growth and business transformation objectives.
Where are you in your transformational journey?
Various scenarios — such as the lifecycle stage of your business, regulatory demands, or industry disruptions — can drive transformations. ‘Transformations require transactions in times of rapid change. By transacting to transform, leaders can unlock more value quicker. Through transactions, you can quickly incorporate skills, assets, and market positions’, says Jochem Moerkerken, Value Creation Leader, PwC Netherlands.
As the M&A rebound takes hold, dealmakers will need to be prepared for the change in conditions and expectations that will accompany it. Four essential aspects to bear in mind in 2024:
- The need for speed.
- Reinventing your business model.
- Talent will again be at a premium, and a key value driver, so set up programs and plans to ensure the key talent sticks around.
- Dare being bolder: don't let the new challenges hold you back.
Hearing the starting bell ring should trigger action for companies looking to adapt to the rapidly changing landscape across sectors. If you want to get ahead of competitors for the future, you need to act now.
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