Mergers and acquisitions market should remain heated in 2023.
Since 2020, the mergers and acquisitions market has experienced a growth phase never seen before. Just for you to have an idea, the year 2021 recorded transactions that exceeded the amount of 344 billion reais, an amount considered record compared to the other years of this most recent decade.
The year 2022 was also one of the most promising in M&A operations, totaling more than 800 transactions in the first half alone, with the technology area taking over and consolidating itself as a leader in each of these businesses.
And for 2023, what are the expectations and forecasts for the mergers and operations market? Continue reading the article and check it out.
Why have mergers and acquisitions grown so much?
To understand the growth of M&A transactions over the last three years, we need to take into account the economic scenario and the context of the country during the period.
It’s not news to anyone that we’re going through a pandemic that affected different sectors of society, including the economy, but its cooling down – especially with the arrival of vaccines – made many companies catch their breath and direct part of their investments to mergers and acquisitions.
With the economy recovering and interest rates going through successive increases, M&A operations became an alternative path for companies to follow a pace of growth and establish a position in the market.
Investing in Brazil has also become an attractive option for companies around the world, especially those that aim to diversify and expand their range of operations in other countries, instead of being restricted to large centers such as India and China.
Another branch that grew within the M&A market was that of startups, which also felt the impact of the economic consequences brought about by the pandemic. As many of them experienced a slowdown in their earnings, merging with large companies became a trend that also strengthened this growth scenario.
We can also mention an advent that occurred in 2021 – which was a watershed for mergers and acquisitions in Brazil: the large number of so-called initial public offerings – better known as IPOs – which totaled more than 50 offers and moved a value that exceeded 54 billion reais.
Which sectors have carried out the most mergers and acquisitions in recent years?
One of the main drivers of the economy in recent years has two words and thousands of business possibilities: digital transformation. This sector was also the mainspring of mergers and acquisitions that took place in Brazil in 2021 – a record year in M&A operations, as previously mentioned – with more than 600 operations.
To explain a little of the growth in the technology segment in the mergers and acquisitions market, just look around us and see how the pandemic has made us even more dependent on digital media. From remote work to the increase in delivery services, technological solutions have become a lure for large companies.
The medical area also gained considerable notoriety in the M&A market, especially if we consider one of the main operations that took place in the last three years, with the merger of two large groups – Hapvida and Notredame – which joined forces to manage a company whose market value surpassed 100 billion reais.
In the first half of 2022, it was also possible to observe some other sectors that obtained an important highlight in mergers and acquisitions, such as energy companies – driven by the privatization of Eletrobrás -, shopping centers – led by the merger of Aliansce and BRMalls -, in addition to the real estate segment and financial institutions, the latter marked by transactions involving Itaú and XP.
Main mergers and acquisitions operations in 2022.
The uncertainty that dictated some of the directions of the economy in 2022 favored the emergence of new opportunities for mergers and acquisitions, since this is one of the main strategies adopted by companies that need to overcome a financial crisis, especially in a period when the COVID-19 pandemic opened up many of these economic difficulties faced by organizations that were unable to maintain a good cash flow.
This scenario of effervescence in the M&A market, naturally, brought important transactions in 2022 for several segments. As already mentioned in this article, the sector of energy companies underwent a gigantic operation that culminated in the privatization of Eletrobrás, with shares on the stock exchange that injected more than 30 million reais into the economy.
In health, 2022 was also a year that marked the merger of important groups. In addition to the unification between SulAmérica and Rede D’or – health plan insurance company and hospital network, respectively -, there was also the merger between two of the largest clinical analysis laboratories in the country: Fleury and Hermes Pardini.
Another major transaction involved the acquisition of Kimberly Clark’s operations in Brazil by Suzano – one of the largest companies in the pulp and paper business -, including a high-capacity toilet paper factory.
An important operation took place in the retail segment, more precisely between two large supermarket groups. The purchase of Grupo Big by Carrefour represented one of the most significant transactions ever to take place in the M&A market, with a total cost estimated at 7 billion reais.
What does 2023 hold for the mergers and acquisitions market?
If you are planning a merger or acquisition to expand your business in this new year that is about to begin, the prospects are encouraging. Experts even estimate that operations will increase by around 15% in 2023, driven by a probable reduction in interest rates and also by the definition of the new government’s economic policies.
There is also a positive outlook around a resumption of IPOs, with forecasts hovering around 70 billion reais and at least 40 transactions for this first half.
To invest in the M&A market, the most important thing is to rely on specialized advice that will put you in front of the best business opportunities and be by your side at every stage of the entire operation. 3Capital has already participated in several transactions – both in Brazil and abroad – and has the experience of professionals who have been working in this sector for over 30 years.
