Despite rising inflation, increasing interest rates, the ongoing war in Ukraine, and more, uncertainty remains the biggest issue for M&A dealmaking in the Benelux region in 2023. Nevertheless, the market remains resilient and there are still a lot of opportunities to be had.

These were the key conclusions at our recent Dealmakers Dialogue event in Brussels when Dominque Maes, Dominque Ranson, Tom Swinnen, and Marc Staal discussed with Pierrot Josepa the challenges and opportunities that lie ahead for dealmaking in Belgium, the Netherlands, and Luxembourg this year.

Uncertainty for M&A

Dealmaking across EMEA saw a decline in Q1 2023 from Q4 2022, with transaction volumes declining 15.4% qoq and values down 34.5%. And the Benelux region saw even steeper declines: volumes were down 20% qoq and value down 50% (Deal Drivers: EMEA Q1 2023).

Rising inflation and interest rates are certainly one of the biggest headwinds for M&A in the region right now. Besides ongoing issues like low valuations and geopolitical events, other factors, like increased foreign investment regulation and product regulation are also creating challenges.  

But overall, the biggest issue for deals is uncertainty. And everything that creates uncertainty is therefore an issue for dealmaking.

But outlook optimistic

However, optimism persists, mainly because the market remains resilient. Despite fewer mega-deals in the region in Q1, renewables/energy deals saw a lot of activity and could be a sector that will create more value going forward, including ESG, as well as TMT.

There could also be opportunities ahead in distressed deals, bolt-on acquisitions, carve-outs, and exits. There’s still a lot of dry powder for private equity to deploy, so the market should have sufficient money to finance those deals. But again, uncertainty may come into play in terms of how long PEs hold onto their assets.

Trusting in technology and humans

But no matter the type of deal, technology is going to play a role in helping get those deals done. It certainly has cut down on time spent doing menial or repetitive tasks. And it has also meant that the number of deals being done now would have been physically impossible ten years ago without technology.

So, with all the headlines talking about AI replacing workforces, should M&A worry? It’s true that technology helps get certain aspects of a deal done, and done faster, but it won’t necessarily replace advisors. A machine cannot replicate or replace the element of trust that people – clients and advisors – have built between themselves. And at the end of the day, M&A remains a people business.