The Quest for Growth – Cross-border M&A and Financing in Europe

Economic protectionism and national security are the result of the rise of populist governments as well as geopolitical tensions. The digital sector has observed an unprecedented expansion. However, concerns over personal data have also increased. Market experts expect that increasing numbers of transactions are being put under vigilant scrutiny in different countries. This can lead to a longer deal closure loop. Under some circumstances, it can even result in the blockage of deals. Cap Expand Partners have identified several geopolitical trends in the markets which are impacting cross-border M&A and financing in Europe.

Cross-border M&A trends

Many cross-border M&A and financing deals await to flourish as vaccination programs roll out and economic recovery resumes in the post-COVID-19 scenario. Interest rates continue to be low and in combination with the large amounts of dry powder, private equity is playing a key role in M&A and financing in Europe. Although large corporations have significant cash reserves, many smaller business owners considering expanding to new markets lack adequate (financial) resources.

The expectation is that the US will lead cross-border M&A activity as usual. However, there is some uncertainty on the impact of the new administration’s policies in the coming months and years. As a result of Brexit, US companies considering expanding to Europe are acquiring companies in the Benelux (see earlier article published on this topic). Europe expects to host most of the inbound M&A activity from China. Many believe that China will remain the dominant player of the investment landscape in the Asia Pacific.

COVID-19 played a massive role in the growth of the technology sector. The growth in this sector is expected to trigger M&A activity in the Asia Pacific. Bankers and lawyers foresee an advantageous environment for cross-border M&A in 2021. The reason for this is the possible easing of Sino-U.S. tensions. Experts expect Chinese outbound investment to revive. The COVID-19 pandemic has profoundly increased the growth in sectors such as digitalization, e-commerce, and fintech. China and Japan led the growth in the M&A sector in Asia in 2020. As cautioned by dealmakers, China’s latest anti-trust crackdown on its tech companies could hamper future M&A.

Various economies in South Asia and South-East Asia provide another growth opportunity in cross-border M&A. Emerging economies privatize their state-owned national assets. Furthermore, new opportunities arise for investments in these countries for public-private partnerships. Some of these ventures might involve mega-transactions.

Companies continue to be subsidized by governments. This subsidy keeps companies afloat. At some point, this government support will end. This may lead to severe liquidity shortages in certain sectors, which will need to be financed.

Cap Expand Partners helps businesses expand to new geographies and markets

Companies venturing into cross-border M&A and financing in Europe can take advantage of our expertise. Our services help clients to strengthen their competitive position across geographies and market segments. We help new companies in their market entry strategies, provide them with financing options, create liquidity and optimize their financing costs. Cap Expand Partners has the expertise and resources to help find the right solution for your corporate development strategy. We assist companies by capturing value opportunities and accelerating growth through cross-border M&A transactions.

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