The Investment Mosaic of 2024

We are delighted to publish the 10th issue of the M&A Pulse in APAC magazine and decided to take this opportunity to invite our M&A network affiliate partners and industry banking experts to share their thoughts on the M&A trends we are likely to see in the year ahead.

Our desire to peer through the looking glass stems from our firm belief that 2024 is set to be a year unlike any other in recent memory, with an intricate set of themes that could pull dealmaking in several directions.

Broadly, we believe the ongoing macro narrative tug of war between recession risk paranoia vs rates normalization and even rate cuts, will continue. Add to this the ever present global geopolitical risks, interlaid with election uncertainty, sprinkled with the gloomy outlook for Asia’s powerhouse economy (China) and deflationary pressure in China, and you’ve got a recipe for some pessimism. 

But there are several themes, which, regardless of global macro uncertainty, are likely to firmly set the APAC dealmaking gear to ‘GO’ this year.

Firstly, companies have spent the last few years streamlining their operations and maximizing efficiencies. Much of the juice has been squeezed. If they want to stay ahead of competitors and grow, their options to grow include mergers and bolt-on deals. Should we see rate cuts in 2024, this trend will only accelerate.

Secondly, with all the efficiency gains realized, some corporations might opt for carve outs as they shed assets that no longer serve their long-term business goals. We started to see this trend emerge last year and are likely to see it strengthen in 2024.

Thirdly, there is an enormous amount of dry powder waiting to be deployed across Asia Pacific. Investors who sat on the sidelines in wait-and-see mode during recent macroeconomic uncertainty, unwilling to compromise on the bid-ask price differential, will now have to step forward to take advantage of opportunities presented.

The impetus for that investment will come from the realization that the long-term structural growth drivers underpinning Asia Pacific economies remain unchanged while the surge in technological innovation is propelling industries in leaps and bounds. Investors simply can’t risk sitting on the sidelines in Asia Pacific this year.

All this won’t be easy – as deal makers we have adapted to more complex, and longer deal processes. But we believe that the trend for M&A in the region will be on the up, though it may affect sectors and geographies differently. I hope you enjoy the insights in today’s newsletter from my colleagues!