On the lookout for silver linings

When perusing the broadsheets, it would appear that Europe’s economic prospects are beginning, albeit slowly, to recover from a period of significant unrest. Inflation is on a downward trend in most countries, evincing the effectiveness of aggressive monetary tightening in the region. Central bankers are likely to pursue one or perhaps two more interest rate rises, and pundits are forecasting a drop in rates for as soon as late Q3.

In the geopolitical sphere, more than a year has passed since Russia invaded Ukraine. Though the war rages on, there have been no major escalations of late, and the likelihood of the conflict spilling over into other parts of Europe appears slim.

All told, the economic outlook is frail, but not terminal. Among Europe’s major economies, only the UK and Germany are expected to suffer GDP contraction this year, whereas countries throughout Africa and the Middle East are projected to enjoy growth far exceeding the euro area average.

Green machine

Those generally positive signs, however, are not filtering through to EMEA’s M&A market, at least not yet. Transaction volumes and aggregate deal values both declined quarter-on-quarter in almost every market covered in this study, with the sole exception being France, which recorded an increase in total deal value from Q4 2022, albeit from a low floor.

Large transactions were few and far between, and the TMT sector—a red-hot dealmaking engine in the post-pandemic period—sputtered conspicuously, as did the real estate and construction industries.

And yet, spots of encouraging M&A activity do manage to shine through, and none more brightly than renewable energy dealmaking. High-profile, cross-border renewables deals emerged in several markets, including Benelux, Italy, and especially Iberia, with Spain a more than worthy role model in Europe’s energy transition. With public expenditure on sustainability in the region only continuing to rise, EMEA is all but certain to become the number-one market for renewable and green energy-related M&A.

Published in association with Datasite, Deal Drivers EMEA provides an in-depth review of M&A activity in 2023, as well as an outlook for the year ahead.

The report is also available on datasite.com.