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1、2024M&A practiceTop M&A trends in 2024Blueprint for success in the next wave of dealsThe following people were instrumental in helping to create this report:Hameed Allapitchai,Roerich Bansal,Charles Barthold,Matteo Camera,Virginia Casas,Oliver Engert,Brian Grandfield,Susan Gurewitsch,Benjamin Houssa

2、rd,Kameron Kordestani,Paul Kuderli,Margaret Loeb,Paul Morgan,James Newman,Lynette Nguyen,Emily OLoughlin,Steve Sakson,Anne Schultz,Rui Silva,Rodrigo Sletatt,Howard Tomb,Fiona Villalobos.A jump in activity in the fourth quarter(of 2023)points to increasing optimism returning to the market.We are deli

3、ghted to share our inaugural annual report on the global M&A market,Top M&A trends in 2024:Blueprint for success in the next wave of deals.While the value of M&A activity fell for all of 2023,a jump in the fourth quarterup 41 percent from the third quarter and 37 percent from a year earlierpoints to

4、 increasing optimism returning to the market,along with a growing appetite to consider M&A as a means to advance strategy.We are privileged to support our clients as they execute pivotal transactions that will transform their businesses.McKinsey partners with clients to maximize the success of their

5、 M&A activity across the deal lifecycle,from M&A strategy to integrations,divestitures,and JVs/alliances.We bring our clients unrivaled transaction and integration expertise,deep industry knowledge,a global network,and a focus on building institutional and executive M&A capabilities.The M&A perspect

6、ives we share here are built from this extensive experience and research.We are grateful to the extended group of colleagues who have helped compile the articles and analyses included herebut most important,we are thankful to our clients who trust us to support them on their M&A journeys.This report

7、 offers perspectives for M&A leaders in a range of industries that we believe will drive dealmaking in the year ahead,as well as discussions on activities critical to delivering successful M&A transactions.We hope you enjoy reading.Jake Henry Senior Partner,ChicagoGlobal co-leader,McKinseys M&A Prac

8、ticeMieke Van OostendeSenior Partner,BrusselsGlobal co-leader,McKinseys M&A Practice1Top M&A trends in 2024Will 2024 launch a bright new era for M&A?By Jake Henry and Mieke Van Oostende Anticipating what could be an inflection point,many dealmakers are preparing for a surgeand new market requirement

9、sin the year ahead.M&A dealmakers have been on a wild ride.From the pandemic-fueled rout in 2020 to 2021s record-breaking recovery,followed by a steep decline in 2023,the global M&A market has offered something of a masterclass in volatility.Toughened by these swings and successive macroeconomic,geo

10、political,and regulatory challenges,many dealmakers are approaching the year ahead not with trepidation,but with a healthy dose of optimism.Yes,they just weathered an exceedingly difficult year for dealmaking.And yes,few can remember a time that was more challenging for M&A.For all of 2023,global M&

11、A activity dropped 16 percent from a year earlier,to$3.1 trillion.1 This contrasts with other market benchmarks,such as the S&P 500,which climbed 24 percent last year on the wings of a handful of technology-and AI-driven stocks.A longer-term view shows the depth of M&As trough in 2023.For example,in

12、 the US,the worlds busiest M&A market,activity dropped to its lowest proportion of S&P 500 market value in 20 years.With curves like that,we were not surprised to hear a provocative question at a recent conference:“Is M&A dead?”Our answer is:certainly not.M&A market durability A variety of factors s

13、upports the global M&A markets durability.First,with the business landscape experiencing seismic shiftsranging from the rise of AI to the growing importance of sustainability and the emergence of a more demanding,tech-enabled consumer classCEOs across industries tell us that M&A is a more vital stra

14、tegic lever than ever.Organic growthwhich never compared well with the most effective M&A strategypales further when significant strategic shifts are called for.This is especially true when companies need to adapt quickly.For example,our latest analysis of the“Global 2,000”the worlds largest global

15、public companiesfound that those making more than two small to midsized deals annually over ten years through 2022 delivered a median excess total shareholder return(TSR)of 2.3 percent.This programmatic approach outperformed all other M&A strategies,including organic growth,which 1 Market results re

16、flect deals announced(and not withdrawn)over$25 million.2Top M&A trends in 2024actually destroyed value in the same period.Part of this success stems from actively managing portfolios.Programmatic acquirers are not just acquisitive;they also actively divest nonstrategic assets.In a McKinsey global s

17、urvey on M&A,respondents from programmatic acquirers were more likely than others to say their organizations conducted divestitures in the past five years.Strikingly,programmatic dealmakers with the most deals earned the highest returns.Seventy percent outperformed programmatic peers who made fewer

18、deals.And the performance gap between programmatic acquirers and companies pursuing organic growth only widened during the COVID-19 years.Programmatic acquirers achieved 3.9 percent excess TSR in the past decade,up from 2.9 percent in the 2010s.Even with some of the lowest M&A volumes in recent year

19、s,our latest research shows that the case for programmatic M&A is stronger than ever(see“The seven habits of programmatic acquirers”).Cash is another important source of ballast.Unlike past markets,when private equity and principal investors drove much global M&A activity,in 2023 they fled to the si

20、delines,slashing their activity 37 percent to$560 billion,as they were spooked by high costs of capital,uncertainty about central bankers plans,and regulators more robust scrutiny of deals.(Indeed,the validity of this last source of uncertainty has been confirmed by the lengthening regulatory review

21、 process,which has extended on average by about 35 percent over ten years,through 2022,for the 100 largest global deals annually.Further,the proportion of companies undergoing long-term investigations in Europe and the US increased about 50 percent from 2017 to 2022.)But private equity(PE)investors

22、may not be so rare in the times ahead.Although they accounted for only 18 percent of deal activity in 2023,they are not likely to linger on the sidelines for long.Some funds will need to consider exit strategies and redeployments in the near term,and others,along with corporate dealmakers,may be aro

23、used by the more than$2 trillion in undeployed capital as of the end of 2023.Although macroeconomic and geopolitical challenges could continue to temper PE interest,that mountain of dry powder nonetheless beckonsa temptation that will grow for PE investors and other dealmakers as they sense a return

24、 to greater market stability.While we live in dynamic times,several factors point to a more favorable macroeconomic environment at this writing.Higher interest rates have tempered the inflationary trends so worrying to central bankers;inflation now hovers just above 3 percent across the US,Europe,an

25、d Asia.Job growth has remained healthy,with US unemployment under 4 percent late last year,while the Eurozone hit historic lows of around 6.5 percent.Consumer spending has also remained robust globally,with US retail sales rising at an annual rate of about 4 percent from a year earlier.This improvin

26、g picture has buoyed economists hopes of a soft landing for the US economya sentiment shared by many investors who boosted stock market returns at the end of the year.Although inflation fears have been receding,concern about geopolitical instability is on the rise.For example,late last year,67 perce

27、nt of respondents to a McKinsey survey cited geopolitical concerns as the top threat to global economic growth in 2024the largest share identifying this as a top risk since shortly after the war in Ukraine began.Concerns about political transitions also emerged as a top risk to global economic growt

28、h.3Top M&A trends in 2024These nearly 1,000 survey participants from a broad range of regions and industries remained largely positive about their own economies,with 46 percent expecting conditions in their home economies to improve in the next six months,and only 26 percent expecting them to worsen

29、.But as the media remained riveted by wars and fractious political conditions in some countries,respondents optimism about the global economy and their companies workforce growth and profits ebbed a bit(see“Economic conditions outlook during turbulent times”).Analysts,meanwhile,are more sanguine abo

30、ut corporate prospects for 2024.We ended the year with analyst consensus of about 5 percent growth in revenue for the year ahead,with gains in EBITDA and net earnings of around 8 to 9 percenta bounty that will not land evenly across industries,they believe(see“Who drove the returns in 2023?”).What w

31、e can learn from 2023 M&A market performance The performance of various sectors and regions may indicate which areas of M&A are likely to recover most quickly from the global M&A markets ten-year low in 2023a decline that followed eight years of mostly stable activity.For all of 2023,global M&A valu

32、e fell 16 percent to$3.1 trillion a showing even weaker than the pandemic year of 2020.While the average deal size increased 14 percent,owing to a handful of large deals,the number of companies changing hands fell 27 percent from a year earlier.With macroeconomic,geopolitical,and regulatory pressure

33、s all curbing exuberance,megadeals(over$10 billion)fell 17 percent to$705 billion,but maintained their 23 percent share of global deal activity.Exhibit 1 Deal activity announced deals11Deals announced(and not withdrawn);value greater than$25 millionSource:Dealogic;McKinsey analysisGlobal deal value

34、and volume fell in 202301,0002,0003,0004,0005,0006,0007,00020142015201620172010201120122013201820192020202120222023$3,519$2,492$2,639$2,506$2,676$3,667$3,483$4,052$3,900$3,547$3,652$3,05902,0004,0006,0008,00010,00012,000Deal value,$billionDeal value,1$billionNumber of dealsNumber of deals$4,460$5,86

35、24Top M&A trends in 2024The Americas,buoyed by surprisingly strong economic growth and employment figures,remained the most active market for M&Aaccounting for more than half of global activity in 2023.Deal value fell 7 percent to$1.6 trillion,a decline that was softened by the activity of programma

36、tic acquirers and a handful of megadeals.Taken together,the value of deals in the Americas for all of 2023 only slightly trails the pandemic-era 2020 total of$1.7 trillion.Also boosting activity in the Americas was dealmakers continuing propensity for large deals,as the region claimed 11 of the worl

37、ds 20 largest deals announced in 2023.Indeed,average deal size jumped 38 percent in the region,to approximately$670 million,even as the number of deals in the Americas fell 32 percent.M&A markets in Europe and the Middle East(EMEA)had a far rougher 2023,experiencing greater challenges from macroecon

38、omic impacts,as well as geopolitical conflict and volatile energy costs.The value of M&A activity in EMEA fell 30 percent to$721 billion in 2023,while deal volume dropped 29 percent.Average deal size remained stable at approximately$400 million.Meanwhile,the value of M&A transactions in the Asia Pac

39、ific(APAC)region fell 19 percent to its lowest level in a decade,$734 billion,but more acquirers outside the region found appealing targets thereespecially in fast-growing economies and countries with relatively low geopolitical risk,such as India.The region overall had net-positive deal inflow for

40、the first time in five years.Japan was a particular bright spot,with activity jumping 49 percent,for example.Greater China drove only about 40 percent of overall deal valueits lowest share in five years.Four industries accounted for about two-thirds of dealmaking value in the region:energy and mater

41、ials;advanced industries;tech,media and telecom;and financial services.Despite the complexities of vastly different business environments across the region,APAC continues to account for about a quarter of global deal value,up from just 15 percent 20 years ago.We expect robust dealmaking in APAC in t

42、he years to come as multinationals headquartered in slower-growing regions look for opportunities to scale up,consolidate operations,diversify,and advance decarbonization and sustainability initiatives.A World Data Lab report projects that Asia will be home to more than 80 percent of the worlds“new

43、consumers”in 2024tens of millions of people who can afford to spend$12 or more per day for the first time.2 Brookings points out that the consuming class will outnumber the vulnerable and poor in the region for the first time in history.3Industry sectors also had varied experiences.Having closed a s

44、eries of behemoth deals that long kept technology,media,and telecom(TMT)companies in top place as the most active dealmakers,TMT passed that baton in 2023.The GEM sector(Global Energy and Materials)has now become the newest fulcrum of M&A activity globally,claiming 26 percent of transaction value as

45、 companies sought to grow core businesses or diversify into adjacenciessignaling their continued faith in fossil fuels.2 The 2024 World Consumer Outlook,World Data Lab,November 9,2023.3 Wolfgang Fengler,Homi Kharas,and Juan Caballero,“Asias tipping point in the consumer class,”Brookings,June 2,2022.

46、5Top M&A trends in 2024Exhibit 2And in a departure from recent years,when PE dealmaking accounted for well over 20 percent of global activity,the dominance of corporate dealmaking grew in 2023 to 82 percent of deal value globally,even as corporate-led value fell 10 percent.As top executives continue

47、d to evolve their strategies through M&A,they kept their focus close to home.Domestic deals remained dominant,delivering 72 percent of deal value.However,the proportion of cross-regional deal activity increasedup four percentage points to 17 percent in 2023as pandemic-era fears continued to recede.2

48、0222023$3,652$3,059Energy&MaterialsTech,media&telecomFinancial ServicesAdvanced IndustriesConsumer&RetailReal EstateTravel,logistics&infrastructureHealthcare3OtherDeal activity announced deals,1$billionSector shares of global activity,Percent2Global energy and materials accounted for the largest sha

49、reof M&A activity in 202319%26%10%14%11%8%8%9%25%17%11%11%6%8%6%4%4%3%1Deals announced(and not withdrawn);value greater than$25 million2Figures do not sum to 100%,because of rounding3Includes Life SciencesSource:Dealogic;McKinsey analysis6Top M&A trends in 2024Exhibit 3 Looking aheadWhile the timing

50、 of a full-throttle M&A market recovery is not entirely clear,global M&A activity gathered steam toward the end of 2023,supporting many leaders view that opportunities would open up precipitously.The value of global M&A activity jumped 41 percent in last years fourth quarter from the third quarter,a

51、nd 37 percent from a year earlier,to$1 trillion.The number of companies changing hands also increased 7 percent from the third quarter.With many dealmakers regaining a sense of exuberance,average deal size jumped 32 percent from the third quarter,to$550 million.Domestic,cross-regional,and cross-bord

52、er M&A activity,1$billionShares of global activity,Percent21Deals announced(and not withdrawn);value greater than$25 million2Figures do not sum to 100%,because of roundingSource:Dealogic;McKinsey analysisDeals between regions increased in 2023DomesticCross-regionalCross border within region202220212

53、02020192023$3,652$5,862$3,547$3,900$3,05976%73%76%73%72%11%10%8%12%12%13%16%16%15%17%7Top M&A trends in 2024Exhibit 4All regions participated in the M&A markets fourth-quarter surge.The value of companies changing hands in the Americas jumped 39 percent from the third quarter,while the average deal

54、size grew 47 percent.EMEA had an even stronger recovery in the fourth quarter,with the value of deal activity increasing 60 percent from the third quarter,while average deal size jumped 63 percent.Only numbers like these could make APACs improvement appear somewhat muted.The value of APAC M&A activi

55、ty increased 29 percent in the fourth quarter from the third,and 15 percent from a year earlier.APAC was the only region with an increase in the number of transactions.2022202120202023Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1Q4$1,107$453$622$1,364$1,533$1,444$1,445$1,440$696$1,143$1,062$750$724$725$586$1,0241D

56、eals announced(and not withdrawn);value greater than$25 millionSource:Dealogic;McKinsey analysisGlobal deal value jumped in the 2023 fourth quarter,showing signs of recoveryDeal activity by quarter1Deal value,$billionNumber of deals005001,0001,5002,0001,5001,0005002,0002,5003,0003,5004,000Deal value

57、,1$billionNumber of deals8Top M&A trends in 2024How to prepareIn anticipation of a market upturn,many leading CEOs across industries and regions are grooming their M&A teamsand their boardsto be ready to leap.Companies are addressing regional and industry shifts with dealmaking aimed at enhancing or

58、 reshaping businesses.In addition to acquisitions(increasingly structured in ways to mitigate risk),transactions often include divestitures and a variety of partnerships.Leading transactors are also prioritizing actions aimed at achieving superior performance in M&A,with the most effective dealmaker

59、s finding many ways to stack the deck in their favor.To get ready for what could be a wave of transactions in 2024,companies can take important steps now:Re-evaluate M&A themes and update strategy,invest in capabilities and assets that will effectively evolve the portfolio,and consider divestitures

60、as actively as acquisitions.Shift M&A themes to mitigate increased geopolitical risksfor example,by emphasizing localization rather than geographic expansion,targeting sectors with stronger market outlooks,investing in vertical integration,and strengthening supply chain resiliency.Establish a higher

61、 bar for value creation to offset higher costs of capital,and think broadly about different kinds of synergiesnot just cost or revenue-bound but also capex;not only combinational,but also transformational synergies.Pursue partnerships and alternative deal structuressuch as JVs,alliances,and public m

62、arket buyoutsto offset the reduced availability of debt financing.Use alternative structures to reduce transaction risks,such as milestone payments.In the following collection of articles,we offer in-depth discussions on trends and best practices to help you navigate the global M&A environment in 20

63、24.We offer perspectives on some of the critical issues likely to influence performance in a variety of sectors as well as insights on issues of central importance to leaders.9Top M&A trends in 202410Top M&A trends in 2024ContentsIndustry sector updates and emerging trends Chemicals:Success through

64、timely,tailored action 16As chemical companies work to break out of two-plus years of underperformance in total shareholder returns,M&A could play a major role in jump-starting higher rates of growth.We describe recent drivers of chemical deals,including entering consumer goods sectors and new geogr

65、aphies,or improving sustainability.Execution mandates include tailoring the integration plan to maximize value,ensuring operational readiness on day one,and protecting and nurturing vital talent.TMT:Thoughtful M&A strategies are key to growth 28While the value of deals in the technology,media,and te

66、lecommunications industries fell last year,many players continued to pursue deals to offset investment costs and grow revenues.Amid indications of a resurgence in activity,we argue that the most successful players will be precise in ensuring that their deals and execution efforts align with their co

67、rporate strategies.Life sciences M&A shows new signs of life 38After deal value in life sciences peaked in 2021 and plummeted as the pandemic ended,dealmaking in the sector revived in 2023.Acquiring pre-commercial biotech assets to fuel growth renewed deal success for pharmaceutical companies.Managi

68、ng the portfolio to improve profitability provided the key for medical technology companies.The current year promises to be an active one for deals across the sector.Rebound of financial services M&A:Focus on growth and capabilities 48Higher interest rates boosted banking profits in 2023,but many of

69、 the worlds banks still struggled to deliver returns above the cost of equity.The growing divide between the industrys outperformers and others suggests that dealmaking will maintain or gain momentum in 2024,including divestments,carve-outs,geographic exits,and rescuesin addition to acquisitions des

70、igned to build scale,gain new capabilities,and drive growth.11Top M&A trends in 2024Consumer goods:A changing landscape for successful M&A 58Shifting macroeconomics in recent years prompted many consumer goods companies to change their M&A strategiesfrom large acquisitions in core businesses to smal

71、ler deals for high-growth companies,and then back again to the core.Looking ahead,winners will look for new ways to generate value,no matter what they buy.Some companies will take more time to strengthen their targets with new skills or funding.They will also look at new integration strategies,somet

72、imes delaying or forgoing full integration.The shifting sands of M&A in transportation and logistics 72Powerful forces are transforming the transportation and logistics industry and shaping new investment priorities for 2024 and beyond.Leading investors are sitting on a war chest of funds and are re

73、ady to spend once the market picture clears,valuations embrace fairer multiples,and perspectives on how to best create value solidify.Would-be dealmakers should lay the groundwork for investment now.Dealmaking in 2024:Getting it rightThe portfolio management imperative and its M&A implications 82The

74、 pandemic brought record levels of M&A activity.But a more volatile environment demands greater attention to portfolio management:selecting the right playing fields and managing company assets more tightly.We urge companies to take portfolio management very seriouslywhich means deciding where to pla

75、y and building the capabilities required to win.Creating value from green M&A 92Across industries,companies increasingly see sustainability-linked deals as a way to stimulate growth and improve operations while raising their environmental,social,and governance(ESG)profiles.We note that the best-perf

76、orming deals incorporate a tailored deal rationale that drives revenue synergies,retains and develops top talent,and aligns on a common mission and culture.Leading through uncertainty:Navigating delays in M&A deals 100Over the past two years,unplanned delays have plagued 30 percent of major acquisit

77、ionsstalling deals for six months on average.To avoid depleting value,momentum,and morale,dealmakers need to anticipate delays and develop contingency plans.The culture compass:Using early insights to guide integration planning 108Despite all the shifts affecting M&A markets,some imperatives remain

78、unchanged.Culture has always been a key determinant of M&A success.Its importance argues for thinking about culture at every stage of the integration effort,starting well before launching integration planning,and using early insights into the cultures of both companies to shape the integration.When

79、a transaction forges a transformation 114As central bankers work to combat high inflation,dealmakers have moved from near-zero cost of capital to an environment where the cost of capital has become a real factor.Accordingly,the most successful acquirers are looking beyond combinational synergies to

80、achieve true performance transformation through M&A.12Top M&A trends in 2024Spotlight on AsiaCreating value with M&A in Asias diverse marketplaces 122The Asia-Pacific region continued to account for a quarter of global deal activity in 2023.Greater China saw less activity for the fourth consecutive

81、year,while dealmaking in Australia and New Zealand held steady,and activity in Japan climbed.Seizing opportunities in this diverse market requires a nuanced grasp of local cultures and business practices.We welcome your comments on this collection of articles,which you can address to:MA-outreachMFor

82、 additional perspectives on M&A market trends and leadership insights,please see our latest thinking at can also listen to experts discuss M&A topics on our Inside the Strategy Room podcast series: M&A trends in 2024Industry sector updates and emerging trends14Top M&A trends in 202415Top M&A trends

83、in 2024Total deal value by target region,$billion(Jan.2020 end of Dec.2023)Deal valueAmericasEMEAAPACNumber of deals2020285345202128820222672023117144114121376034354538284035465245Chemicals&agriculture Fact sheet16Top M&A trends in 2024Share of activity by sub-sector,FY 2023161AgricultureAgriculture

84、AgricultureTotal deal value,by sub-sectorPercentTotal deal volumes,by sub-sectorPercentPlasticPlasticChemicals otherChemicals otherFibersFibers7173177662Average deal size by sub-sector,$million(Jan.2020 end of Dec.2023)4994994734574684383654361592222121701607226814120202021202220235004003002001000Ag

85、riculturePlasticChemicals otherFibers17Top M&A trends in 2024Chemicals:Success through timely,tailored action By Obi Ezekoye,Ulrich Weihe,Christine Johnson,and Andrew RoseM&A is a powerful means to create value in the chemical industry;getting it right requires tailoring execution to the sectorBecau

86、se the chemical industry is cyclical,its leaders have had to work harder when broader economic conditions shift against them.Now,as the industry works to break out of two-plus years of underperformance in total shareholder returns(TSR),we see a clear case for companies to take bold action,including

87、pursuing aspirational transformations,more aggressive capital allocation,and breakthrough innovation.Mergers and acquisitions are one of the most effective methods to achieve these objectives.And,after two years of declining M&A activity,we see indications of an upturn.After hitting a low point in t

88、he first-quarter of 2023,deal value in the chemical,materials,and energy sectors continued to grow through the year.This suggests that now is the time for chemical acquirers to consider their M&A capabilities and prepare for the upcoming wave of deals.Achieving excellence in M&A execution can be dif

89、ficult.Moreover,the chemical industry has some specific nuances that acquirers should consider when tailoring their integration program.Industry sector updates and emerging trends18Top M&A trends in 2024Chemical companies are now seeking new ways to thrive within the current paradigm,and M&A can be

90、a catalyst for the needed strategic shifts.19Top M&A trends in 2024Industry underperformance requires bold actionLast fall,we wrote about the unique challenges facing the chemical industry,which has recently underperformed the world index in TSR(Exhibit 1).Exhibit 1 Several factors have historically

91、 driven chemical industry outperformance,including growing exports to Asia(mainly China),increasing chemicals penetration,functional excellence-driven performance improvements,price increases,and strong fundamental demand.These have become less and less prevalent in the past ten-,five-,and two-year

92、periods.Chemical companies are now seeking new ways to thrive within the current paradigm,and M&A can be a catalyst for the needed strategic shifts.Patterns in chemicals M&AChemical industry M&A has been hit even harder by the challenges that have depressed global deal activity:persistent inflation,

93、high interest rates,historically high valuations,and geopolitical tensions.Exhibit 2 compares chemical industry M&A activity with that of other industries.Total chemical deal value in both 2022 and 2023 was 30 percent lower than the average during the eight years prior.That is more than twice the re

94、duction in all M&A globally in the same period.TSR,CAGR,%,in$Source:MSCI World Index;S&P Global Market Intelligence;McKinsey Value IntelligenceFollowing a history of outperformance,the chemical industry has underperformed the world index for more than two years 20+years10+years5+years2+yearsDec 2002

95、-May 2023Dec 2021-May 2023Dec 2017-May 2023Dec 2020-May 20239.09.99.96.87.82.03.8-3.7ChemicalsMSCI World Index20Top M&A trends in 2024Exhibit 2 Even against the backdrop of major market corrections across all sectors,the chemical industry has underperformed compared to the broader market in the past

96、 two years.In this context,we are not surprised to see that M&A and other bold moves were much less prevalent in the chemical industry.A closer look at chemical M&A over the past decade reveals two patterns.First,M&A activity tends to follow sub-sector themes,shifting away from large,diversified bus

97、iness portfolios that have sometimes been built over 100-plus years.We have,for example,seen segment-level consolidation in agriculture chemicals and pigments and coatings over the past few years.Most recently,there has been a rise in deals in flavors,fragrances,cosmetics,and personal care.We expect

98、 to see these waves continue as owners of fragmented,highly diverse portfolios seek to build global leadership positions with synergies,and improve their competitiveness at the segment level.Second,the data shows spikes in chemical megadeals,which we define as those greater than$10 billion.In 2016 a

99、nd 2019,for example,these megadeals made up more than 60 percent of total chemical deal value(Exhibit 3).Global and chemical M&A have slowed in 2022-2023Source:Dealogic;McKinsey analysis2014 20212022 2023ChangeAnnual deal value,Average,$billionAnnual deal value,Average,$billion3,9083,377168117-30%-1

100、4%Global M&AChemicals M&A21Top M&A trends in 2024The prevalence of megadeals in chemicals could be explained by the industrys ability to successfully create value through large deals.Our 15-year study of M&A archetypes has found that,across industries,a programmatic approachdefined by two or more sm

101、all or mid-sized deals per yeargenerates the most value on a risk-adjusted basis,presuming the deals have a meaningful size,(i.e.,a median of 14 percent of the acquirers market cap purchased).However,for chemical companies,the large deal approach to M&Adefined as less frequent but larger acquisition

102、s(with at least 30 percent of the acquirers market cap purchased)has also been a successful strategy in generating excess TSR.Exhibit 4 compares the performance of the program types since 2013.Total M&A activity in chemicals and agriculture1,$billion,nominal,as announced,by date of announcement1Deal

103、s announced(and not withdrawn);value greater than$25 million;deal value does not include debtSource:Dealogic;McKinsey analysisChemical M&A has been strongly shaped by megadeals over the past decadeMegadeals$25 million-$10 billion deals202220232021202020182017201620152014201934%24%0%10%10%0%68%54%14%

104、of total chemicals deal value64%11412114611712291238198124268Exhibit 3 22Top M&A trends in 2024Exhibit 4 While not all large chemical deals are successful(as shown by a higher standard deviation in Exhibit 4),it is true that the chemical industry has succeeded with large deals more than other indust

105、ries.When we explored why,we found that successful large chemical dealmakers often used these deals to pursue more focused platforms,with the aim of gaining greater geographic or product depth as pure-plays,or by stepping into higher-margin sectors.These themes fall in line with broader research tha

106、t has shown that focused portfolios perform better than large,diversified conglomerates.Notably,even successful large deal acquirers tended to complement this strategy with a programmatic approach that includes smaller deals and divestitures,with an average of 2.6 events a year.January 2013 December

107、 20221Companies that were among the top 2,000 companies by market cap at December 31,2012(more than$2.5 billion)and were still trading as of December 31,2022;excludes companies headquartered in Latin America and AfricaSource:S&P Capital IQ;Global 2000(2022);McKinsey Value IntelligenceIn chemicals,bo

108、th programmatic and large deal M&A can deliver excess TSR Global 2000Excess TSR,Standard deviationExcess TSR,Standard deviationMedian excess TSR,PercentProgram type (Classifed over fve years)ChemicalsMedian excess TSR,Percent2.308.6%8.2%-0.1-1.69.9%8.3%9.0%5.1%8.3%6.0%Large dealProgrammaticOrganicSe

109、lective1.01.60-0.523Top M&A trends in 2024Recent drivers of programmatic chemical M&AIn addition to the above drivers of larger deals,we noticed three factors that are prevalent in chemicals programmatic M&A:Consumer markets.Companies are pivoting their positions,driven by shifts in consumer trends,

110、including increased demand for products such as electronics,batteries,lightweighting,food and nutrition,and personal care.Companies are capturing important growth opportunities and building more promising R&D portfolios.Moreover,consumer markets are attractive for their lower capital requirements an

111、d higher ROIC.This is a prevalent trendalthough moving downstream can be a challenging pursuit,given high multiples and historically lower TSR.Sustainability.More than half of the announced chemical industry deals in 2023 had sustainability drivers,continuing a trend of recent years.These drivers in

112、clude securing advantageous green feedstock,building a reliable and green energy supply,pivoting toward a greener product production portfolio,increasing exposure to sustainable end markets,and enhancing circularity of the portfolio.Geographic optimization.Chemical companies are pushing to be closer

113、 to customers.Driven by supply chains and local needs,global companies are requiring a more tailored local approach to serving dispersed end markets.The current post-COVID climate,further complicated by geopolitical tensions,has spurred companies to evaluate their footprint and ensure they have loca

114、l partnerships that can accelerate customer access or facilitate movement of supply.Considerations to improve M&A execution in chemicals At a basic level,the keys to success in chemical deals are no different than for other industries.Whether pursuing a programmatic agenda or large deals,companies m

115、ust take several steps to beat the market.Successful programmatic dealmakers,for instance,prioritize their targets,firmly commit to their strategy,and carefully chart progress.The best large dealmakers minimize business disruption during integration while outperforming their aggressive synergy targe

116、ts and institutionalizing new ways of working in the new company.Beyond these keys,chemical acquirers should address some industry-specific nuances when designing integration programs.They must tailor the integration approach to their growth and capability-building objectives,ensure they have planne

117、d for the day one risks particular to the industry,and protect and nurture the technical talent that generates the most value and is hard to replace.Tailoring the integration plan for value creationChemical companies have historically used M&A as a means of realizing growth,with deal models centered

118、 on new capabilities or business models,significant revenue synergies,or entering new markets.Last year was no exception,with at least half of the deals announced signaling significant value creation from non-cost mechanisms.Successfully delivering on transformational expectations requires avoiding

119、two typical failure modes we have seen in chemical integrations:24Top M&A trends in 2024Failure mode 1:Applying an integration playbook focused solely on cost synergies.Cost synergies,such as consolidating functions or centralizing sourcing,are of course implicit to almost any deal and important to

120、capture.However,they will not suffice to deliver the benefits expected of these deals.Because cost synergies are more easily measured and quickly captured,hitting these targets may give management a misleading sense of achievement.They do not guarantee that the future company is equipped with the ca

121、pabilities required to deliver on the real opportunity.They may even prevent integration leaders from driving overall business success.Failure mode 2:Setting unrealistic,unfunded,top-line targets.Aggressive revenue targets can convey a convincing ambition to the capital markets and make sense on pap

122、er.However,achieving them typically requires intense focus,mobilizing the entire organization in a cross-functional approach,and additional capital and operational expenses.Moreover,acquiring high-growth“nuggets”requires the acquirer to resist the temptation of“embracing the target to death”that is,

123、overwhelming them with processes and structures and distracting them from their growth objectives.Thus,companies often fail to capture the planned impact of these investments.If the newly integrated company fails to deliver growth as promised,management teams then push for further productivity impro

124、vements,including headcount reductions,to meet earnings targets.Successful acquirers start by establishing a strong understanding of each deals rationale.For deals predicated on revenue synergies,these acquirers establishearly oncross-functional teams that can identify precise sources for these syne

125、rgies.In deals involving acquisitions of new IP or entering areas of new opportunity,winners hold off on consolidating the teams for cost savings.Instead,the integration leadership starts by designing a future operating model that will protect the targets culture and its“special sauce”what makes the

126、 target company unique and successful.In deals requiring capitalizing on joint innovations,winners avoid counterproductive steps such as racing to close labs or prioritizing a more cost-efficient footprint.Ensuring day one operational readiness Chemical company integrations tend to pose more signifi

127、cant operational risks on day one than mergers in other sectors.Even when it appears that little is changing day to day,chemical integrations bring supply chain and logistics risks triggered by legal entity changes and product registrations.Day one success thus means addressing regulatory and compli

128、ance risks due to Successfully delivering on transformational expectations requires avoiding two typical failure modes.25Top M&A trends in 2024the integration of quality systems,legal entity changes,and new markets.Environmental and safety risks are also of high concern given the nature of chemical

129、operations,which can be disrupted when combining organizations with different safety procedures and protocols.Chemical integration leaders should therefore go beyond the typical day one preparedness topics like financial and HR systems.Companies must thoughtfully design chemical-specific day one rea

130、diness plans with a focus on critical systems,processes,and interdependencies across functions.They must rehearse these plans with all stakeholders,such as commercial,operations,legal,IT,and environmental health and safety groups.The integration team should invest time to define day one critical esc

131、alation processes across both companies for potential risk scenarios,such as supply chain,quality,safety,or customer issues.Deal partners must put ample time into understanding each others protocols,deciding if they need any changes on day one,and,at a minimum,ensuring visibility in case of an emerg

132、ency.For example,how will communication procedures be deployed to mark all employees“safe”if the two companies are still on different telecom and internet systems on day one?Successful chemical acquirers will also stand up a Week 1“command center”where issues can be escalated and managed rapidly.Pro

133、tecting and nurturing value-creating technical talentTalent retention is a critical topic in any integration,and much effort(and capital)will typically be allocated to ensuring the best leaders stay on with the new company.Chemical acquirers must address not just the standard“high potential”talent p

134、ools,but also their most valuable talentresearchers,scientists,and innovation directors.These colleagues carry institutional knowledge,capabilities,and sometimes“only-in-the-industry”experience that creates significant value for the organization.Many of the chemical deals we reviewed in 2023 were mo

135、tivated by innovation factors such as access to new patents,technology,and processes.Delivering on the chemical acquisition deal thesis usually requires retaining and nurturing technical talent pools.Much has been written about talent retention in integrations,but retaining technical and R&D talent

136、requires more than traditional financial retention measures.Successful chemical acquirers put innovation at the forefront of integration planning and offer creative incentives,such as special research assignments,innovation awards,or the opportunity to pursue independent research.The integration str

137、ategy must also be thoughtful on the location and structure of day-to-day work.Where will the innovation teams be located?Will they have to relocate to a new headquarters?How will they be integrated?Companies must take care to design the optimal location strategy.There are many anecdotes describing

138、target companies top scientists leaving The integration team should define day one critical escalation processes for both companies.26Top M&A trends in 2024for jobs at local universities rather than relocating to the new headquarters.At the same time,research has shown that a virtual-only tech workf

139、orce may be less innovative than in-person teams.R&D organization integration requires thoughtful measures like rotations or hybrid strategies to ensure sufficient co-location to support the pace of innovation.M&A will continue to be one of the most critical strategic moves for chemical company mana

140、gement teams,and we expect activity to pick up in the coming months.In all cases,creating and executing an effective M&A strategy requires understanding both the M&A execution basics as well as the chemical industrys special nuances that can determine a deals success.The authors wish to thank Devina

141、 Singh for her contributions to this article.Retaining technical and R&D talent requires more than traditional financial retention measures.27Top M&A trends in 2024AmericasEMEAAPACNumber of deals20201,9153,41120212,53820221,2962023Total deal value by target region,$billion(FY 2023)Deal value40424918

142、51,0693442575792011332751498381,67051691392Technology,media,&telecommuni cations Fact sheetTechnologyTelecomMedia28Top M&A trends in 2024Share of activity by sub-sector,FY 2023611021791711TelecommunicationsTechTotal deal value,by sub-sectorPercentTotal deal volumes,by sub-sectorPercentMediaTelecommu

143、nicationsTechMediaAverage deal size by sub-sector,$million1,2406623811,0511,314305825322326827310630MediaTech20202021202220231,50012009006003000Telecommunications29Top M&A trends in 2024TMT:Thoughtful M&A strategies are key to growth By Lena Koolmann,Anthony Luu,and Suzy ShawWith technology,media,an

144、d telecommunication companies poised for a potential resurgence in M&A,players seeking growth need precise,focused M&A strategies that are aligned with their corporate goalsTechnology,media,and telecommunications(TMT)companies are connected in several ways.They have similar drivers of growth.They al

145、l generate connectivity among people and systems.They have all been faced with constant and rapid digital innovation,requiring them to pivot their businesses quickly.As a result,many have continued to rely on mergers and acquisitions to offset investment costs and expand revenues.In 2023,for instanc

146、e,TMT continued to contribute a significant 17 percent of the value of global M&A activity,a share that was only slightly down from 2022.Nonetheless,TMT has not been immune to the overall decline in transactions and value.Transactions fell about 50 percent in 2023 to about 1,300 deals.Total deal val

147、ue dropped 43 percent to$516 billion.The bulk of the decline was in North America and in technology,where higher interest rates and depressed spending prompted many companies to focus on shoring up core operations rather than expanding into new areas.Still,M&A continues to be a key growth driver in

148、TMT.A few examples tell the story.In technology,software companies have often used M&A to acquire new intellectual property and talentas demonstrated by Cisco Systems acquisition of cybersecurity company Splunk,for instance.The media industry has seen significant consolidations,as businesses seek to

149、 expand the share of consumers with whom they engage.For example,multiple US companies have merged for this purpose.Further,telecom operators have consolidated and optimized their portfolios through acquisitions and joint ventures,as deals across Europe confirm.Industry sector updates and emerging t

150、rends30Top M&A trends in 2024In 2023,TMT continued to contribute a significant 17 percent of the value of global M&A activity,a share that was only slightly down from 2022.31Top M&A trends in 2024Looking ahead,we see early indications of a resurgence in M&A activity.For one,the relatively weak econo

151、mic profit of smaller companies provides compelling M&A opportunities for top players seeking to gain access to new profit pools.In addition,private equity has been playing an increasingly important role as PE firms seek higher returns from rolling up software players or go after relatively stable,k

152、nown returns from telecom infrastructure players.As we have seen over time,programmatic M&A,in which companies execute a series of smaller deals to support a specific business case or M&A theme,continues to generate the most value compared to other strategies.As TMT players gear up,success requires

153、them to be sharp and precise in aligning their deals and execution efforts with their corporate strategies.The enduring value of programmatic M&AOur research shows that,in TMT,programmatic M&A generates excess total shareholder returns of 2.3 percenta much better performance than other M&A strategie

154、s,such as large deals or selective M&A(Exhibit 1).Exhibit 1Global 20001 median excess TSR by program type(Jan 2013 Dec 2022)1Companies that were among the top 2,000 companies by market cap on December 31,2012(over$2.5 billion)and were still trading as of Dec 31,2022;excludes companies headquartered

155、in Latin America and AfricaSource:S&P Capital IQ;Global 2000(2022);McKinsey Value IntelligenceProgrammatic M&A outperforms other strategies across TMTProgrammaticSelectiveLarge dealOrganic17 25 12 11 40 43 9 14 14 19 12 12 Cross-sectoral median excess TSRGlobal 2000 Telecom1 Global 2000 Media1 Globa

156、l 2000 Technology1 Sample sizexx-1.6-0.102.35.9-4.1-1.1-1.60.40.1-0.7-1.73.20-5.7-1.832Top M&A trends in 2024In this context,small deals of under$500 million have continued to dominate the market in recent years,making up 88 percent of total transactions between 2020 and 2023,and 21 percent of total

157、 deal value.Many players are still seeking to acquire technology and people to avoid lengthy in-house development cycles,which are historically more expensive and riskier.At the same time,megadeals of more than$5 billion have remained more common in TMT than in other sectors,with 44 percent of total

158、 transaction value from 2018 to 2023 compared to 34 percent across all other sectors.As mentioned,telecom players continue to consolidate to reduce high infrastructure costs.One example is the merger of broadband company Virgin Media with mobile provider O2.Separately,some media and tech players hav

159、e sought to expand beyond their coreinto gaming and other areas,for example.While the outlook for programmatic M&A still looks promising in TMT,players must also be mindful of the characteristics,nuances,and trends unique to each of the three subsectors.Technology:Software remains the center of acti

160、vitySoftware drove 80 percent of all technology M&A activity in 2023,with total transaction value at$253 billiondown 60 percent from the previous year.This dominance has been consistent over the past decade,with both existing software companies and non-tech players using software M&A as a key growth

161、 mechanism.We expect software to remain an active subsector for M&A activity in 2024,given that:Valuations of early-stage players are beginning to come down from record highs that had been driven up by private equity and non-tech players entering the market.If private equity players were to decrease

162、 their M&A and double-down on their existing portfolios,this could leave opportunities for strategic buyers.Confidence is rising,reflected in a return of notable venture-backed IPOs in late 2023 after a 20-month break from listings in the USfor example,the marketing automation company Klaviyo.Compan

163、ies will continue to use M&A to acquire IP and talent rather than go through the expensive and time-consuming process of developing it in house.The Cisco-Splunk deal mentioned earlier is a prime example.Other growth options perform far worse than programmatic M&A.For instance,organic strategies in t

164、echnology erode total shareholder return(TSR)by 1.7 percent,compared to positive 0.4 percent for programmatic M&A.We anticipate that the most successful players will consider these plays:33Top M&A trends in 2024Expansion,focused on cross-selling.We expect continued expansion within existing product

165、categories,new categories,or geographically,but with a greater focus on fulfilling the cross-sell proposition.Successful players will take a programmatic approach to thoughtfully acquire companies where they can add value through technological capabilities or management knowledge,given that de novo

166、innovations are rare.For example,Hexagon,a creator of automation systems,has completed over 170 acquisitions since 2000,and now plays across multiple industries in both software and hardware.Winners will also significantly strengthen their integration and organic scaling capabilities to deliver on r

167、evenue synergies and extract value from their acquisitions.These are skills that the sector has been less focused on historically,given high valuations.Reconfiguration of the portfolio.Historical evidence suggests that being a top three or four player in a specific industry or product segment has si

168、gnificant value,given the benefits of scale.While many companies have broadened their portfolios to grow their top lines,they should now use a critical lens to identify which of their segments are the most relevant and profitable.Successful players will consider divestments and asset swaps to narrow

169、 their focus and allow their organizations to allocate resources to products and services where they can truly win.Media:Programmatic strategies unlock exceptional valueMedia was one of the few sectors that saw an increase in deals in 2023,with deal value at$89 billionup 19 percent from 2022,but sti

170、ll below the levels reached in 2020 and 2021.Looking ahead,we see that the industry still exhibits considerable fragmentation in several sub-segmentssuch as publishing,where there are few cross-geography players.That fragmentation,plus increasing pressure on margins,might drive some companies to see

171、k scale through megadeals,which could also allow them to secure funding for an accelerated shift to digital business models.However,players need to be cautious,as government competition authorities have struck down several recent horizontal mergers due to concerns about market overlap and potentiall

172、y excess power.For instance,the French TV companies TF1 and M6 called off their deal after regulators expressed concerns about media consolidation.A judge blocked the merger of Penguin Random House and Simon&Schuster in the US,saying it could harm competition in publishing.More fundamentally for pla

173、yers across media formats,programmatic M&A approaches have significantly outperformed megadeals.Historically,a programmatic strategy in media delivered impressive excess TSR of 5.9 percenttwice the return in other sectors.Going forward,we expect that the most successful players will continue to take

174、 a programmatic approach and to thoughtfully acquire targets based on one of several archetypes that suit them best:Multi-media shops.With a large portfolio of assets and brands across media verticals,multi-media shops have highly diversified revenue streams,an established core customer base,and,typ

175、ically,national scale in advertising.M&A helps them to expand content types and offer robust Winners will significantly strengthen their integration and organic scaling capabilities.34Top M&A trends in 2024user experience across platforms,thereby improving brand value and increasing consumer engagem

176、ent.However,integration of many of these acquisitions has been limited so farallowing acquirers further opportunity to extract value and bring together their portfolio.Media vertical heroes.Several players,primarily in EMEA,have doubled-down on a specific media vertical,such as radio,audiovisual con

177、tent production,music events,TV broadcasting,or book publishing.They have prioritized using M&A to build and maintain a unique and market-leading value proposition with national or international scale.Successful players will integrate these transactions to gain scale within their niche and become th

178、e ultimate destination for consumers in that space.“Beyond-media”conglomerates.These players derive most of their revenues from a core media business,but they have expanded into non-media products across industries to monetize their reach.This model is seen more regularly in EMEA,Latin America,and A

179、PAC,with players engaging in strategic M&A to use their customer insights and consumer reach to compete with incumbents more effectively.For example,traditional publishing businesses have expanded into online marketplaces.As competition authorities become more cautious about media deals,it will beco

180、me increasingly important for national companies to adapt their M&A approach,looking beyond their geography or sector(which could attract opposition)to compete with global players.Digital disruptors.These companies are growing rapidly with an innovative tech-based proposition,but their core business

181、 remains outside media.They have huge cash reserves and access to capital,so they can use M&A to enter media verticals and capture customers from more traditional companies.Examples include US companies that have acquired businesses in online gaming and content creation.By capitalizing on their exis

182、ting customer base and technology capabilities,these disruptors can drive monetization across the entire business and undercut traditional media companies.Telecom:Growing or splitting up can both succeedTelecommunications operators saw$111 billion worth of transactions in 2023,down 29 percent from 2

183、022.As in the other TMT sectors,players have gained significant value from programmatic M&A,achieving excess TSR of 3.2 percent during the year while other strategies either netted little or eroded value.Players need to be cautious as government competition authorities have struck down several horiz

184、ontal mergers.35Top M&A trends in 2024EMEA was the top region for telecom M&A activity during 2023,with 57 percent of global transaction value.Several types of deals predominated,including consolidation of mobile operators and convergence of fixed-mobile players(such as Virgin Media and O2).Some pla

185、yers have pursued operational de-layeringseparating their network infrastructure and operations from customer-facing operationsto increase specialization and value various parts of the business appropriately.Private equity has also started to play a much bigger role in this space.Meanwhile,telecom M

186、&A activity in the US has fallen steadily over the past decade as the market becomes highly consolidated.Looking forward,we expect to see three themes for M&A-savvy telecom operators:1.Further consolidation to capture cost synergies while increasing average revenue per user from cross-and up-selling

187、 and reducing the risk of churn from converged customers.In terms of options,EMEA still has some markets with more than three mobile network operators,including France,Italy,and the UK.By contrast,APAC has limited opportunities remaining for mobile-mobile consolidation,with many markets already at j

188、ust two or three operators.In addition,fixed-mobile convergence will remain a trend in Europe,particularly in countries where pure mobile or fixed players have significant market share.These include Denmark,Ireland,the Czech Republic,and Romania.We also expect to see more complex deals,spurred by re

189、gulators demands for remedies to maintain market competitiveness.For instance,the European Commission has required the sale of assets before approving some recent telecom operator deals.2.De-layering will continue to accelerate in Europe.De-layering enables operators to optimize their capital struct

190、ures,focus more attention on their customers,and improve management focus.It can take a number of forms.The primary one will continue to be companies separating their network infrastructure and operations from customer-facing operations.Companies may also seek internal P&L splits or joint ventures.J

191、Vs,in particular,can help companies attract investments into their network expansion upgrades,or unlock cost synergies by sharing fixed and/or mobile networks with another operator.In APAC,we see some de-layering of data centers,while others sell and lease back their cell towers.However,the de-layer

192、ing trend in APAC is much less developed than in Europe.3.Diversification will be increasingly important as telecoms face decreasing revenues per customer and new competition from established tech players and start-ups.An erosion in value from traditional telecom products will force players to look

193、elsewhere for returns,An erosion in value from traditional telecom products will force players to look elsewhere for returns.36Top M&A trends in 2024although executing such diversification has historically been more challenging in the less protected markets that make up the majority of the sector.No

194、netheless,research suggests that there is demand for new services,with 56 percent of customers open to buying a service other than connectivity from their operators.1 This is likely to be particularly important in developing markets,where increasing the average revenue per customer is difficult.Exam

195、ples of such new services could include cloud,cybersecurity,internet-of-things,fintech,healthtech,and artificial intelligence.Caution:Regulatory obstacles need attentionAs we have already suggested in some specific cases,a key trend that TMT players must contend with is growing regulatory scrutiny.T

196、he results of this trend will range from longer waits for approvals(compared to other industries)to increased deal complexity as regulators require more remedies,such as divestitures,to address competition concerns.This increased scrutiny has different consequences for the three sub-sectors:In techn

197、ology,regulators concerned about geo-political tensions may sharply scrutinize deals that put critical infrastructure and data in the hands of foreign entities.In media,large companies have expanded their reach globally,and regulators continue to refine the definition of markets and assess the marke

198、t power of individual players.In telecom,consolidation may help companies manage significant infrastructure requirements and investment costs,but it is reducing the number of competitors in some markets,such as the US and Sweden.Regulators are keen to maintain healthy competition and protect consume

199、rs.2024 and beyondLooking ahead to the M&A landscape in coming years,technology,media,and telecommunications will remain key sectors to watch,due to their dynamic nature and potential for disruption.Given the historical importance of programmatic M&A to drive value,we expect to see a continuation of

200、 that trend.However,at the same time many businesses have become increasingly complex,with broad product portfolios and large geographic footprints.Therefore,the savviest players will not only look to new products,services,and markets,but they will also re-evaluate their portfolios and engage in str

201、ategic divestments.Both of these strategies will allow them to thoughtfully reshape their organizations and retain or expand strategic and competitive advantages.The authors would like to thank Ahmad Ajjoun,Kim Baroudy,Peter Dahlstrom,Brendan Gaffey,Tom Meakin,Mieke Van Oostende,Karin Saken,and Clem

202、ens Schwaiger for their support in writing this article.1 McKinsey Telecom Adjacencies Survey,western Europe,May 2020.37Top M&A trends in 2024AmericasEMEAAPACNumber of deals20209671224202186920227452023Total deal value by target region,$billion(Jan.2020end of Dec.2023)Deal value262533933212956225463

203、8239506435451778381309Life sciences Fact sheet38Top M&A trends in 202461232149291520MedtechServicesBiotechTotal deal value,by sub-sectorPercentTotal deal volumes,by sub-sectorPercentShare of activity by sub-sector,FY 2023PharmaMedtechServicesBiotechPharmaAverage deal size by sub-sector,$million64157

204、8458229416401465656438350282225635601324272MedtechBiotechPharma20202021202220238006004002000Services39Top M&A trends in 2024Industry sector updates and emerging trendsLife sciences M&A shows new signs of life By Torsten Bernauer,Rebecca Kaetzler,Rajesh Parekh,and Jeff RudnickiHaving peaked in 2021 a

205、nd plummeted as the pandemic ended,deal value revived in 2023,with pharma companies pursuing growth and medtech companies chasing profitability.These trends promise to continue in 2024.After deal value peaked in 2021 and then plummeted in the wake of the pandemic,dealmaking in the life sciences sect

206、or revived in 2023.Acquiring pre-commercial biotech assets to fuel growth renewed deal success for pharmaceutical companies,and proactively shaping the business portfolio to improve profitability provided the key for medical technology companies.This year promises considerable deal activity across t

207、he sector.Life sciences sector performance For a decade,both the pharmaceutical and the medical technology(medtech)industries saw unprecedented M&A activity.Between 2011 and 2021,the number of deals in the life sciences sector increased 13 percent a year,and that rate doubled between 2019 and 2021.D

208、eal value peaked at$517 billion in 2021.While deal volume slowed in recent years,like overall M&A activity,dealmaking in life sciences saw an upswing in 2023.The value of transactions jumped 23 percent from a year earlier,exceeding the value realized in 2020,before the pandemic(Exhibit).40Top M&A tr

209、ends in 2024In 2023 the value of transactions jumped 23 percent from a year earlier,exceeding the value realized in 2020,before the pandemic.Top M&A trends in 202441ExhibitThe pandemic shocked the economic system and brought M&A activity to a virtual halt.As the system has revived,so has the pressur

210、e on companies to deliver profitable growth.But rising interest rates have complicated debt financing.Struggling to secure financing for their pipelines,small biotechnology companies(biotechs)looked to the financial clout of big pharma companies and private equity players for R&D and product develop

211、ment support.Medtechs responded to the pressure by optimizing their portfoliosdivesting slow-growing,less profitable assets and making growth-oriented acquisitions to improve their financial profile.A few large transactions,like Pfizers acquisition of cancer drug-maker Seagen for$45.7 billion in ear

212、ly 2023,had outsized impact on the jump in transaction value and slightly increased average deal sizes across the biotech and pharma sub-sectors.But most of the deals in the sector remained smaller biotech-related transactions aimed at generating growth.Of the 745 transactions in 2023,91 percent had

213、 a value below$1 billion,and 54 percent fell below$100 million.Biotech and pharma deals accounted for the lions share of deal volume61 percent and 23 percent of value,respectively.At the same time,smaller medtech transactions delivered 29 percent of the deals,but only 15 percent of deal value.-16%+2

214、3%Deal value,$billionUnlike the global M&A market,the life sciences sector saw deal activity increase in 20231Deals announced(and not withdrawn);value greater than$25 millionSource:Dealogic;McKinsey analysis309381Life sciences sectorGlobal M&A market120222023202020213,5475,8623,6523,0592022202320202

215、02135451742Top M&A trends in 2024Programmatic approach to dealmakingMany life sciences companies have embraced a programmatic approach to M&A.They execute a steady stream of relatively small,strategic transactionsacquisitions to fill gaps in their portfolios or to enter promising new segments and di

216、vestitures to cull businesses that underperform or no longer meet their needs.As our two decades of research on M&A strategies show,this approach creates the most value across industries.On average,programmatic dealmakers enjoy higher TSR than companies making selective or large transactions.The pro

217、grammatic approach works especially well in the pharmaceutical industry.The steady stream of small deals enables major players to make very focused acquisitionsa specific drug,for example.At the same time,their global reach can open vast markets for the products of small biotech companies.In search

218、of growth:Pharma deals target pre-commercial biotech assetsPharma companies have an almost insatiable appetite for biotech assets.Because biotech valuations have declined almost 70 percent since their peak,many of these assets are increasingly attractive for achieving the following goals.Accelerate

219、R&D.Pharma companies acquiring biotech assets can reduce the projected timeline for assets in the pipeline at least 30 percent,on average.Success requires R&D integration that taps the power of the acquirers R&D system while preserving the targets unique capabilities.This balance is not easy to achi

220、eve.It requires a thoughtful approach that empowers the target to continue leading the process while using the acquirers resources and know-how to speed it up.The acquiring and target companies must align early on the priorities and the resources that will have the greatest impact on accelerating pr

221、ogress,as well as the greatest potential risks and ways to avoid them.One successful acquirer made the strategic decision to ring-fence the targets R&D but bring late-stage assets into its own development pipeline to benefit from its scale and accelerate clinical development.Meanwhile,another acquir

222、er stuck with the targets development plan and experienced significant delays,as the targets capabilities were still immature.Most of the deals in the sector remained smaller biotech-related transactions aimed at generating growth.43Top M&A trends in 2024Accelerate launching and commercially scaling

223、 products.Pharma companies bring field forces and the ability to rapidly scale commercial presence.They can also professionalize market access,patient services,and other critical drivers of product uptake.The best acquirers use commercial playbooks to speed the scaling of biotech assets.Acquisition

224、by the larger company can enable the smaller company to capitalize on the scale and capabilities of the acquirers commercial team to strengthen its launch capabilities and accelerate the timeline.But realizing these benefits requires the targets launch team to work closely with the acquirer from the

225、 beginning and to secure protection from the disruption caused by the broader integration process in order to preserve its unique capabilities.Winners typically use a clean team to develop plans so they can start acceleration as soon as the deal closes.The clean team plays a particularly important r

226、ole when the acquiring and target companies compete in a therapeutic area(TA),which prohibits them from sharing commercial information until the deal closes.The clean team can collect and analyze information like customer and geographic footprints that will be ready to share on day one.Culture looms

227、 especially large in pharmaceutical deals because so many deals involve large companies acquiring small companies.Many small companies owe much of their success to their distinctive culture and ways of working.The acquirer is buying not only the targets tangible assets,but also the talent and cultur

228、e that nurture the companys innovation engine and entrepreneurial spirit.Thoughtful talent retention and cultural integration are essential to sustaining the value of the smaller company.A recent McKinsey roundtable explored common challenges to successful cultural integration.Identifying and engagi

229、ng the truly critical talent lays the foundation for success.That talent typically belongs to a few individuals who are the knowledge and innovation leaders of the biotech(versus the broad institutional knowledge of a large pharmaceutical company).But these individuals are often“corporation-averse.”

230、They chafe at bureaucracy and a process-heavy work environment.They value having skin in the game,multi-tasking,making quick decisions,and taking an agile,entrepreneurial approach to getting things done.Even compelling incentives like an attractive financial package and recognition of their contribu

231、tions to the biotechs success may not retain them.Culture looms especially large in pharmaceutical deals because so many deals involve large companies acquiring small companies.44Top M&A trends in 2024In search of profitability:Medtech deals manage the portfolio proactively The current market enviro

232、nment is putting strong financial pressure on many medtech companies.Their share prices have declined over multiple periods,and investors are demanding higher returns.Medtech companies are responding by changing their approach to value creation.Yesterday,many pursued growth by acquiring non-core,com

233、plementary assets.Today,rising interest rates are forcing them to focus on improving their margins to secure higher valuations in the capital markets.Medtech companies typically approach deals with one or more of three goals in mind.Reshape the portfolio.Medtech companies focus on the weighted avera

234、ge market growth rate of the businesses in their portfolio.They look at growth across the portfolio and spin off lower-growth businesses in pursuit of higher aggregate growth.Tuck-in acquisitions at the product level are also prevalent across the industry.Would-be acquirers are getting more selectiv

235、e.They are searching for specific products,innovations,or capabilities that can close the gaps in their core product categories or,more importantly,strengthen their growth profile.Allocate capital to digital offerings.Most medtech companies are seeking to expand their value propositions beyond the b

236、enefits of their physical products by investing in digital commercial strategies and digital tools(investments often enabled by reshaping the portfolio).They are building digital health ecosystemsconnecting multiple devices to create a platform where physicians and patients can interact,and data int

237、egration delivers more value for both than the physical product alone can.The results:better medical outcomes at lower cost to serve and more satisfied physicians and patients.One multinational medtech giant built a fully integrated ecosystem that connects devices,data,applications,and services for

238、continuous improvement of patient outcomes.The combination of specialized medical expertise with leading-edge digital technology enables evidence-based decisions that ensure more efficient delivery of the highest-quality care on a single,secure platform.Many medtech companies are acquiring software

239、players to accelerate their platform building.These acquisitions eliminate the need to build digital capabilities in-house and depend on years-long internal cycles of software development.Take advantage of more creative transaction structures.Third-party capital is increasingly available from privat

240、e equity firms and some hedge funds.These firms often invest in opportunities that do not match the immediate priorities of medtech companies,but they recognize that many medtech companies have more investment opportunities than funds to invest so they are increasingly approaching these companies ab

241、out providing funding.45Top M&A trends in 2024Meanwhile,many would-be acquirers are exploring less traditional transaction structures.Joint ventures are becoming common across the medtech industry.Companies are forming long-term strategic partnerships with digital players,co-acquiring companies with

242、 PE firms,and raising external capital to fund R&D programsin exchange for product royalties.M&A outlook for 2024Several factors fueled the revival of M&A activity in 2023.Pharma and medtech companies have exceptionally strong balance sheets.They are taking a hard look at new technologies,artificial

243、 intelligence,and digital to build and expand their capabilities.Targets are increasingly willing to do transactions at stabilizing values.These factors have staying power,and many life sciences companies are publicly hunting for deals and seeking to shed non-core assets in their quest for value cre

244、ation.This year promises an active market for M&A in the sector.To prepare to play and win in this market,life sciences companies should do some soul-searching.For pharmaceutical companies,this means asking:What assets will build my pipeline and make me a leader in fast-growing segments like cell an

245、d gene therapy and biologics?Can my capabilities make the deal economics work?For medtech companies,this means asking:How can I fuel growth and access faster-growing market segments?Can digital capabilities accelerate my entry into solution businesses?Should I spin off portions of my portfolio?Medte

246、ch companies look at growth across the portfolio and spin off lower-growth businesses in pursuit of higher aggregate growth.46Top M&A trends in 202447Top M&A trends in 2024AmericasEMEAAPACNumber of deals20206741,161202191620225442023Total deal value by target region,$billion(Jan.2020end of Dec.2023)

247、Deal value17112763268118133101941591275078361519255354Financial services Fact sheet48Top M&A trends in 202433561227824273128Commercial/retail bankingOtherbankingFinancingsolutionsTotal deal value,by sub-sectorPercentTotal deal volumes,by sub-sectorPercentSub-sector activity,FY 2023Investment banking

248、/managementFintechCommercial/retail bankingOtherbankingFinancingsolutionsInvestment banking/managementFintechAverage deal size by sub-sector,$million793554308499539820645350202335932559445271371Investment banking/investment management Commercial/retail bankingFintech20202021202220231,000800600400200

249、0Financing solutionsOther banking49Top M&A trends in 2024Rebound of financial services M&A:Focus on growth and capabilitiesBy Nadine Hussein,Fadi Najjar,Mieke Van Oostende,and Andrew ZarrilliAfter the 2023 spike in large deals and bank failures,the outlook for financial services M&A appears bright a

250、nd activeparticularly for acquirers with the skills to execute complex deals Mergers and acquisitions remain a high priority for financial services players heading into the mid-2020s.The number of deals has declined since the historic pace of 2021,but average deal size has increased by 11 percent ov

251、er the past two years based on Dealogic data.Notable deals in 2023 included UBSs acquisition of Credit Suisse,JP Morgan Chases deal for First Republic,Nasdaqs acquisition of Adenza Group,Reliances spin-off of Jio Financial Services,and FISs sale of a 55 percent stake in Worldpay to GTCR.Our analysis

252、 shows that more than half of the 40 largest deals in 2023 were meant to rebalance portfolios or acquire assets of failing banks:40 percent were divestments,carve-outs,and geographic exits,and 18 percent were acquisitions of the assets of collapsing US and European banks.About 20 percent were scale

253、transactions meant to improve efficiencies and top-line growth;22 percent were aimed at acquiring products,technology,or talent.Industry sector updates and emerging trends50Top M&A trends in 2024The industry needs M&A to grow,innovate,and become more resilient.51Top M&A trends in 2024Will the same t

254、rends continue to shape dealmaking in 2024?Most of the financial services executives we talk to across financial subsectors in Europe,the Middle East,and Africa(EMEA)expect M&A to remain a high priority and to maintain or gain momentum.Most believe capability-building and scale effortsincluding inte

255、rnational growth and expansion into adjacencieswill be the biggest drivers in 2024.And while most players say they have clear M&A strategies,we have found that some best practices have yet to become the norm,such as standing up teams to identify M&A targets,routinely scanning the market for transact

256、ion opportunities,and building the teams and tools to navigate the intricacies of complex deals.Scale and capability deals will dominate as banks seek avenues for growth and make selective carve-outs We expect powerful industry trends to bolster M&A activity in bankingespecially scale,capability,and

257、 carve-out transactions.According to the latest McKinsey Global Banking Annual Review,higher interest rates boosted the sectors profits in 2023,with returns on equity in 2022 reaching about 13 percentwell above the average of 9 percent since 2010.Returns varied widely,of course:some institutions del

258、ivered record performance,putting them in position to consider acquisitions of the many banks around the world that struggled to achieve returns above their cost of capital.1 Most deal rationales will fall into three categories:building scale,acquiring capabilities,or carve-outs to rebalance portfol

259、ios.Building scale Many banks with strong returns are now looking for strategic opportunities,including M&A,to enhance their positions and gain scale to boost efficiencies.Many of the laggards,meanwhile,will explore wayssuch as divestitures and outright salesto raise profits and even survive.We expe

260、ct this trend to be more prevalent in North America,the Middle East,and Asia and the Pacific,where the banking sector tends to be more fragmented.In Europe,large-scale transactionsespecially cross-border dealsremain limited due in part to the complexities of local licensing regulations,liquidity,and

261、 accounting implications,including fair value adjustments.Under such conditions,most European banks prefer organic expansion over inorganic growth.Netherlands-based ING,for example,has long followed an organic expansion strategy and now has a presence in six European countries.1 Based on McKinsey Pa

262、norama and S&P Global data.Some best practices in M&A have yet to become the norm.52Top M&A trends in 2024Most M&A activity will likely continue to focus on domestic targets,but recent advances in the banking business model may enhance the value of some cross-border transactions.Such deals can provi

263、de diversification and immediate access to local talent,along with quicker value realization from accelerated market entry compared with organic growth.Leading banks are addressing many of the challenges that have historically hindered such deals.Theyre adopting cloud technology,for example,offering

264、 innovative digital journeys that can appeal to customers across borders,and most recently harnessing generative AI to improve customer service.As these technologies mature,they may offer European banks new avenues for growth and collaboration,accelerating the shift toward a more dynamic and interco

265、nnected financial ecosystem.Unlike rescues,where speed is of the essence,scale deals meant to boost efficiency and growth require acquirers to determine how to preserve the fundamental value drivers of the target while overlaying their own management practices,culture,and commercial strategies.A car

266、efully planned integration accounts for and captures the strengths and synergies of both organizations,preempts or overcomes regulatory obstacles,preserves critical talent,and manages the technology integration.Acquiring capabilitiesMost banks pursuing growth will seek not just scale but capabilitie

267、sespecially technologyto speed delivery,improve customer experience,lower cost to serve,and digitize business models and distribution.Many banks will aim to acquire strong platforms,tech talent,and robust product portfolios that will strengthen their fee businesses.Ohios Fifth Third Bank,for example

268、,acquired Rize Money,an embedded payments platform,in May.2 Tokyo-based Mizuho Financial Group completed its acquisition of Greenhill,an M&A and restructuring advisory firm,in December.Many fintechs may look like great targets for banks seeking to build capabilities,especially in technology and tale

269、nt,and the sharp drop in fintech valuations in 2022 might appear to signal that the subsector is ripe for transactions.3 In our experience,however,most banking leaders still view fintechs as expensive and lacking clear paths to profitability,and remain skeptical about the goodwill these acquisitions

270、 could create.The truth is that many large banks struggle to integrate fintechs and would rather partner with them than acquire them.Indeed,we find that the success of fintech acquisitions often depends on talent retention and striking the right balance between full integration into the company and

271、keeping some elements independent to preserve value and speed of delivery while sustaining innovation.Private equity(PE)capital will also play an important role in fintechs,especially B2B fintechs and those with business models attractive to more conservatively minded investment committees.(For more

272、 on this topic,please see the sidebar,“How will private equity players deploy dry powder in the coming year?”)2 “Fifth Third announces acquisition of Rize Money,”press release,May 22,2023.3 A sustained overall valuation drop,with the public market fintech index fPrime down by about 48 percent from 2

273、021 to 2023;see also“Q3 2023 Quarterly FinTech Insights,”FI Partners Research,October 2023.53Top M&A trends in 2024The futureand valueof carve-outsIn their ongoing search for improved return profiles,banks will continue rebalancing portfolios with divestments,carve-outs,and exits from non-core geogr

274、aphiesalthough perhaps at a smaller scale than in 2023.Some will seek to simplify their geographic footprints to focus on core markets.Others will divest or carve out units that may generate more value as standalone entities,such as payments,capital markets,and securities businesses.In these and som

275、e other businesses,banks may face a simple choice:scale them up significantly or make an exit.While many observers believe carve-outs invariably provide more total shareholder returns(TSR),the latest research by our Strategy&Corporate Finance practice suggests this is no longer true.We have found th

276、at only half of large carve-outs generate excess TSR;the remainder underperform in their sectors,averaging zero median excess TSR.While carve-out hypotheses are sound for most dealsincreased strategic focus,fit-for-purpose operating model,and optimized capital structureexecutives struggle to operati

277、onalize them.Consolidation and capabilities in asset management Asset managers have been grappling with cost pressures,margin constraints,and the largest decline in assets under management in almost a decadeabout 10 percent in 2022(Exhibit 1).Research by McKinseys Strategy&Corporate Finance Practice

278、 shows that these firms profit margins dropped five percentage points from 2021 to 2022.4 As a result,asset management boutiques and mid-sized firms need to evaluate their scale,specialization,product mix,and overall ability to withstand pressures from larger firms while maintaining profitability.Sc

279、ale deals are already underway,and we expect them to continue;consolidation has reduced the number of asset management firms ranked in the Pensions&Investments Money Managers Directory over the past decade.5 Capabilities will dominate many deal theses as asset managers seek to expand into new produc

280、ts such as alternatives and private credit through partnerships or more traditional acquisitions,creating streams.Franklin Templeton acquired Putnam Investments,for example,to expand into alternative products and retirement plans after years of asset outflows at both firms.64 Based on McKinsey Perfo

281、rmance Lens Global Growth Cube data as of 2022,2022 McKinsey Performance Lens Global Asset Management Survey,and public filings.5 Tracked in the Pensions&Investments Money Managers Directory,with a total decline from around 650 in 2013 to 430 in 2023.6 Franklin Templeton investor relations website,P

282、WC asset management report July 2023,and Morningstar;see also Russel Kinnel and Dan Culloton,“A merger of equals?Two mediocre fund companies combine,”Morningstar,May 31,2023.Expectations are high for deal activity in 2024 and beyond.54Top M&A trends in 2024Asset management valuationsnow at a price-t

283、o-earnings ratio of 26-1,according to the latest McKinsey Global Banking Annual Review 2023will continue to pose significant obstacles to dealmaking.The problem is an excess of potential acquirers and a shortage of willing sellers.Successful acquisitions in this space require a continuous focus on r

284、etaining top private bankers,investment advisors,product specialists,and other investment talent.Looking aheadWhat will it take to benefit from an uptick in M&A activityand turn it into sustained growth?We believe the most effective acquirers will see M&A as core to corporate strategy,institutionali

285、ze M&A capabilities for systematic deal screening and due diligence,and build the tools and execution muscle for rigorous planning and faster value capture.To start,financial services players should strengthen the sophistication of their M&A capabilities.Too many players wait for opportunities to en

286、ter their radar rather than designating personnel or establishing specialized M&A teams to continuously explore potential transactions,divestitures,and product acquisitions.A proactive,programmatic approach to scanning the market is crucial to staying ahead of the curve and maintaining alignment wit

287、h strategic principles.Global third-party managed assets,1$trillionNet fowsof BoY AUM-12.2-13.514.09.24.811.37.8-0.99.57.25.33.22.70.35.43.060.812.910.0108.9202220212020201820172016201520142013 EoY2022 EoY20191Includes 42 countries in North America,Latin America,Western Europe,CEE,Asia-Pacifc,Middle

288、 East and AfricaSource:McKinsey Performance Lens Global Growth CubeGlobal assets under management fell by about 10 percent in 2022Net fowsMarket performance2.42.42.12.31.8-2.72.93.41.323.560.824.51.1%4.5%3.6%2.2%3.1%3.0%3.6%4.0%3.6%Exhibit 155Top M&A trends in 2024Once M&A is at the center of strate

289、gic thinking and resource allocation,successful financial services players fine-tune their deals to maximize value.They develop detailed value-capture targets,for example,pursue them relentlessly,and stay committed to rigorous planning.They do not succumb to premature celebration:the real work begin

290、s after the deal is closed,and it requires ongoing attention and meticulous execution.In the wake of an acquisition,organizational priorities make or break the success of the transaction.They go beyond immediate financial gains to include safeguarding organizational culture and the strengths that pr

291、ompted the strategic move in the first place,retaining top talent,aligning leadership,and designing a proper operating model.Financial services M&A activity may not soon return to its recent historic highs,but expectations are high for considerable deal activity in 2024 and beyond,driven by the indu

292、strys need to grow,harness new technologies and drive innovation,meet consumers ever-rising expectations,and become more resilient to macroeconomic and geopolitical volatility.The authors wish to thank Igor Yassenovets for his contribution to this article.How will private equity deploy dry powder in

293、 the coming year?Private equity firms now hold more than$2 trillion in dry powder.The central questions are whether they are willing to deploy it and where.Many firms due diligence processes are becoming markedly more rigorous,and most investment committees are seeking far more compelling business c

294、ases amid elevated interest rates.A debate is underway about what kinds of businessescapital-heavy or capital-light,for examplewill generate the biggest risk-adjusted returns.Investors want to gauge each business models long-term viability and resilience during turbulent times.Many will continue to

295、focus on less-regulated,capital-light businesses such as payments,which is technology-rich and subject to little direct regulatory scrutiny.But in the current interest rate environment,liability-generating business models can look more interesting.Business-to-business fintechs will likely draw more

296、attention,particularly relative to B2Cs that typically incur high customer acquisition costs and are more sensitive to macroeconomic fluctuations and inflationary pressures.56Top M&A trends in 202457Top M&A trends in 2024AmericasEMEAAPACNumber of deals2020331473202139820222292023Total deal value by

297、target region,$billion(Jan.2020end of Dec.2023)Deal value361844974939376928102252397186150133Consumer goods Fact sheet58Top M&A trends in 2024938412315181416917Consumer FoodConsumer DurablesConsumer OtherTotal deal value,by sub-sectorPercentTotal deal volumes,by sub-sectorPercentSub-sector activity,

298、FY 2023Consumer BeverageConsumer Personal CareConsumer FoodConsumer DurablesConsumer OtherConsumer BeverageConsumer Personal CareNote:70%of the deal value for Consumer Personal Care is related to the$42B Kenvue spin-ofAverage deal size by sub-sector,$million(Jan.2020end of Dec.2023)2261,2242,8372024

299、09321444359345383395623219209293378379371523613Consumer BeverageConsumer OtherConsumer Durables20202021202220233214214659451,2003,0001,0008006004002000Consumer Personal CareConsumer FoodAverage by year59Top M&A trends in 2024Consumer goods:A changing landscape for successful M&A By Harris Atmar,Jeff

300、 Cooper,Stefan Rickert,and Rodrigo SlelattBuffeted by economic trends,consumer goods companies have diversified their M&A strategies,with winners balancing growth and margin expansion.Success ahead requires integration tailored to each deals thesis.Over the past decade,programmatic mergers and acqui

301、sitionsin which companies execute a series of smaller deals based on a specific business casehave consistently generated more value than other M&A strategies.But,while programmatic M&A continues to create value,the strategic focus of consumer goods M&A programs has shifted fundamentally,in line with

302、 macroeconomic trends.Since the start of the previous decade,players seeking growth have moved from the traditional approach of strengthening their core portfolios through large consolidation deals to multiple smaller deals for high-growth,“challenger”companies.This shift was most pronounced from 20

303、18 to 2021,when companies were hyper-focused on top-line growth.However,the recent inflationary environment has prompted consumers to reduce purchasing volumes in about 90 percent of consumer goods categories,causing investors to renew their focus on the bottom line.This shift is evidenced in consum

304、er companies M&A strategies by an uptick in traditional consolidation deals,as such deals emphasize cost synergies and margin expansion.Looking ahead,we expect the most successful players to develop a hybrid deal approach that couples investments in small,high-growth brands to enter attractive long-

305、term categories with portfolio consolidation acquisitions to drive the bottom line in core categories.To ensure success with this hybrid approach,acquirers will need to look differently at how they integrate and support their targets.Industry sector updates and emerging trendsTop M&A trends in 20246

306、0Acquirers will need to look differently at how they integrate and support their targets.61Top M&A trends in 2024 Trends in consumer goods M&AWith changing macroeconomic trends in recent years,companies have had to shift their M&A strategies to adapt.To understand the M&A landscape and what these co

307、mpanies are trying to achieve in M&A,our analysis below can be viewed through three different lenses:1.Deal volume and value.This first lens involves the assessment of deal volume and value within specific sectors,which yields insights into the quantitative aspects of M&A activities within the consu

308、mer goods sector.2.Deal frequency.This lens is crucial for understanding whether companies opt for a consistent,programmatic approach involving a series of deals,or choose more infrequent dealmaking involving sporadic medium or large transactions.3.Deal strategy.The deal strategy lens covers the str

309、ategic intent behind consumer goods M&A deals.It involves categorizing deals into archetypes based on dominant strategic motives,providing a qualitative perspective on the evolving landscape of consumer goods M&A.Examining consumer goods M&A trends through these lenses enables a comprehensive assess

310、ment of the sectors dynamics.The lenses can serve as a guide to make sense of recent M&A activity.Shifts in deal volume and value After low deal volume and value in the COVID-impacted year of 2020,the consumer goods landscape experienced a marked shift in M&A deal volume and size.In 2021,as sizeable

311、 assets in the sector became both scarce and prohibitively expensive,companies strategically pivoted toward a higher-volume,lower-deal-value approach.This movement peaked in 2021,which saw approximately 470 consumer goods deals globally.Afterwards,deal volume decreased significantly,falling to rough

312、ly 230 deals in 2023.(See fact sheet above.)The share of activity by sub-sector varied across deal volume and value.(See fact sheet.)As for volume,the largest single category remained food,constituting about 40 percent,while beverages and durables collectively accounted for an additional 30 percent.

313、Personal care remained the smallest segment.As for deal value,personal care was the largest at 38 percent,although this was driven mainly by large spin-offs of pharmaceutical companies consumer businesses.Prime examples are Johnson&Johnsons$42 billion spin-off of Kenvue(2023),and GlaxoSmithKlines$31

314、 billion spin-off of Haleon(2022).Shifts in deal frequency Consumer goods M&A performance varies significantly in terms of deal frequency.Notably,programmatic M&A strategies emerged as consistent drivers of higher returns with lower risk during the period from 2013 to 2022.The success of programmati

315、c approaches is highlighted by their ability to deliver excess annual total shareholder return(TSR)of 2.3 percent,outperforming all other strategies across sectors.In the consumer goods sector,the excess TSR of programmatic strategies was 0.9 percent,compared with 0.4,0.5,and negative 1.5 percent re

316、spectively for selective,large deal,and organic strategies(Exhibit 1).This gap in performance across industries has been widening,underscoring the efficacy of programmatic M&A.62Top M&A trends in 2024Exhibit 1 Furthermore,across sectors,programmatic dealmakers with the most deals earned the highest

317、returns.Seventy percent of them outperformed programmatic peers who made fewer deals.This approach is associated with long-term success as well,as evidenced by the fact that most of the top 100 largest firms globally,across all sectors,employ programmatic M&A over a long period of time,such as ten-p

318、lus years.Many of the most successful programmatic M&A players in consumer goods also build formidable in-house M&A capabilities for M&A strategy,deal execution,and integration.All of this demonstrates the importance of successful inorganic growth strategies and execution as well as how the market r

319、ewards the players that do it mostand do it better.Global 20001 median excess TSR by program type(Jan.2013Dec.2022)Programmatic M&A strategies tend to bring higher returnsthan others1Companies that were among the top 2,000 companies by market cap on December 31,2012(more than$2.5 billion)and were st

320、ill trading as of December 31,2022;Excludes companies headquartered in Latin America and AfricaSource:S&P Capital IQ;Global 2000(2022);McKinsey Value Intelligence26%14%47%14%28%10%52%11%Program nameProgrammaticSelectiveLarge dealOrganic2.30-0.1-1.60.90.40.5-1.5Median excessTSR,%Distribution among to

321、p companies,1%Median excessTSR,%Distribution among top companies,1%Overall marketConsumer63Top M&A trends in 2024 Shifts in deal strategyOur analysis splits consumer goods M&A deals into four strategic archetypes:Portfolio consolidationstrengthening the core with established brands to build scale Ad

322、jacency playsbetting on companies adjacent to the acquirers core business Data and tech enablementadding capabilities in these areas to support growth Challenger brandsbuying smaller,fast-growing companies in the acquirers core business.Our research indicates a fundamental shift in the use of these

323、archetypes during the past decade.The shift has significant implications on how M&A in consumer goods will evolve in the future,as well as what it takes to successfully execute inorganic strategies.From 2013 to 2018,companies mostly pursued large deals within core categories(what we call portfolio c

324、onsolidation).From 2019 to 2022,they moved to top-line growth at all costs:they leveraged low interest rates to snap up multiple small,high-growth challenger brands,data and tech enablement companies,and adjacent players to gain access to new categories.1 However,in 2023 the data starts to show a re

325、turn to portfolio consolidation(Exhibit 2).This change has been driven by a combination of lower asset valuations and investors increased focus on the bottom line versus growth.Portfolio consolidations naturally offer more“bankable”cost synergies and are easier to integrate into existing large-compa

326、ny operating models than smaller,high-growth brands.Outlook for the next wave of M&A As we look to the future of consumer goods M&A,we believe the landscape will continue to be shaped by evolving macroeconomic conditions and their implications for shareholder expectations.We see three likely evoluti

327、ons that will define the next wave:1.A shift away from“growth at all costs.”As companies increasingly pursued adjacency plays and challenger brands leading up to 2022,they were largely driven by pursuit of growth and cautious about damaging any of their targets“secret sauce”the things that make them

328、 unique.This resulted in less integration and fewer cost synergies.With inflation boosting input costs,and consumers becoming less accepting of higher prices from cost pass-throughs,companies will increase their cost synergy ambitions.1 “The next wave of consumer M&A:Executing for value,”McKinsey,Oc

329、tober 21,2019.64Top M&A trends in 2024Share of deals by deal archetype,%of dealsAverage deal size,$millionConsumer goods M&A trends are shifting toward historical normsSource:S&P Capital IQ;Global 2000(2022);McKinsey Value Intelligence63%14%50%17%17%38%23%17%28%27%25%23%19%38%39%16%22%20%20%22%11%28

330、%20131820192020202120222023PortfolioconsolidationChallenger brandsAdjacency playData/Tech capability1,30060023%Exhibit 22.Reduced multiples will re-invigorate portfolio consolidation.High consumer goods multiples over the past four to five years have made large industry consolidation deals prohibiti

331、vely expensive.While the size and growth profile of some assets will make them inaccessible,the challenges to consumers wallets today will affect the outlook for many consumer goods companies and suppress acquisition prices for those seen as vulnerable.We expect this to open up opportunities for sca

332、led,top-tier players to make a few large,transformative deals focused on portfolio consolidation,as evidenced by the clear uptick in this strategy in 2023.3.Reduced deal volume compared to 2021-2022,but an uptick in 2024.Higher interest rates than in the past decade will limit the sheer number of de

333、als that companies can pursue,as leveraged positions present a challenge to company economics.While we do not expect higher rates to limit everyone from pursuing programmatic strategies,we do expect that they will continue to suppress deal volume in the near term compared to averages of the past five years.They will also reinforce the role of cost synergies in deal theses.As a result,strategic buy