Merger and Acquisition trends in H2 2023

The second half of 2023 did not see any significant changes in the pattern of M&A activity, with a cautious outlook persisting and the quiet optimism that the period started with never being fully realised.

Q3 opened with JPMorgan Chase & Co having taken the top spot as the world’s number 1 M&A adviser, having advised on $29.8 billion worth of M&A in the first six months of the year.

M&A activity did increase by 16% in the third quarter while AI-related mergers and acquisitions deal activity in the medical devices industry was down 22% from the same period in 2022.

Generative AI was the key watchword in a period where financing remained expensive and recession fears continued to hang over proceedings.

By November 2023 there were two major wars going on globally, which only added to the sense of uncertainty. The result was an unsettled economic landscape.

Recession obsession and the return of volatility remained constants.

While it seems that the stable days are no longer to be seen, there are reminders that volatility in the market is normal and should be expected.

Significant M&A activity in H2 2023:

Details of a proposed PacWest Bancorp and Banc of California Inc merger were unveiled with the deal receiving regulatory approval in late November 2023.

Regulators and competition watchdogs in the UK and US finally allowed Microsoft to acquire gaming giant Activision Blizzard in October following a restructured proposal that sees the company’s cloud-streaming rights going to Ubisoft under a ‘non-exclusive licence’. The $68.7 billion deal, originally proposed in January 2022, will see the Xbox producer gaining control of mega-franchises like World of Warcraft, Call of Duty and Candy Crush.

Cubic Telecom, the Irish based maker of Internet of Things software for vehicles, was acquired by Japan’s Softbank Corp for €473 million, in what was reported Ireland’s biggest software deal ever.

German company Baader Global acquired a majority stake in the Irish-based software firm Emydex for an undisclosed sum.

In a $6.5 billion acquisition deal, led by global investment firm Francisco Partners and global alternative asset managers TPG, the US-based web tracking and analytics company New Relic was taken private. The company had originally gone public in 2014 and the transaction drew a lot of attention in what was deemed a relatively dry season for IPO.

Cisco purchased cyber security company Splunk in a $28 billion all cash deal.

The fintech-as-a-service startup Rapyd acquired a portion of PayU from internet giant Prosus for $610 million, a move which will enable the API provider to extend its offering into emerging markets.

August saw the announcement that AXA were to acquire Ireland’s second largest healthcare insurer, Laya Healthcare for €650m from AIG. The deal received regulatory approval in November.

Winbond Health acquired a minority stake in Marne Medical Cloud for $7 million, the industry’s largest disclosed deal of Q3 2023.

September saw subscription-based language learning service Babbel acquire language learning browser extension Toucan.

The Adobe / Figma multibillion-dollar merger, originally announced in September 2022, was abandoned in December 2023 after a series of regulatory roadblocks and ‘no clear path’ to the necessary regulatory approvals found. Following the initial announcement the deal had remained in doubt with concerns about competition and the potential to harm innovation being the main factors.

Irish automation and analytics company Glantus was acquired by Genesis Bidco, who are wholly-owned by Finland’s Basware. Having gone public in 2021 with a valuation of £37m, following a period of financial difficulty, Glantus were snapped up in the deal for £17.8 million.

The UK’s Competition Markets Authority (CMA) approved global technology leader Broadcom’s purchase of VMware.

IPO activity in H2 2023

Trends continued to tend towards subdued for the most part.

Investor hope for a turnaround was rekindled in September with the $54.5 billion valuation of SoftBank’s chip designer Arm which was the biggest IPO of the year at that date. Coming seven years after the company had previously been taken private Arm ended first day trading +25%. The demand for Initial Public Offerings among investors has been hit hard over the last two years, so the success of the ARM IPO, was seen as a significant light in the storm.

It was followed by a series of IPOs, including German footwear maker Birkenstock, and grocery delivery company Instacart, although many of these IPOs suffered dips in the days after their debuts, suggesting that investors continue to remain hesitant.

What to expect in 2024:

Outlook remains cautious as slow global growth casts clouds on the forecast, with the hopes of avoiding a recession still being spoken about in hushed tones.

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