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Steve Roberts
PE Leader Germany & EMEA at PwC Germany
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Fewer, but overall more valuable deals in the first half of 2024
In the first half of 2024, the number of mergers and acquisitions fell by just under 16 per cent to 1,253 transactions. This was the second consecutive half-year with a decline in deals. In contrast, the total value of deals rose by a good 9 per cent to €60.6 billion – previously, the transaction value had fallen since the second half of 2022. Despite the increase, the total value of transactions is still significantly lower than in the same period of the previous year (1st half of 2023: €79.7 billion).
The negative macroeconomic trend, high interest rates and geopolitical uncertainty continue to brake the revival in M&A activity. However, there are initial signs of a recovery: in addition to the prospect of lower interest rates, this includes, for example, the increasing share of private capital in transactions. Despite higher financing costs, financial investors were more active than strategics, at least in terms of acquiring companies – as they always find opportunities in crises and seize them. Financial investors continue to find alternative financing options, away from bank financing, and are also sitting on large amounts of “dry powder”, which will further boost deal activity. In addition, companies are also increasingly issuing high-yield bonds, making it easier for them to obtain financing.
The study at a glance
Most M&A activity in the first half of 2024 took place in the TMT sector (technology, media and telecommunications), which saw 453 deals. This corresponds to a good 36 per cent of all transactions. Among them was the second-largest deal that took place in the DACH region in the first half of the year: the acquisition of Aareon AG by TGP Capital LP and the pension fund CDPQ from Québec, Canada (volume: €3.9 billion). The many transactions in the TMT sector are favoured by the ongoing digital transformation of the industry.
A good 22 per cent of all transactions took place in the industrial manufacturing and automotive sector (IM&A). Many companies in the sector are currently busy adapting to megatrends such as automation and electrification - one of the main drivers of mergers and acquisitions.
In the IM&A sector, the largest and third-largest transactions in the DACH region took place in the first half of 2024: the acquisition of Covestro AG by Abu Dhabi National Oil Company (volume: €11.7 billion) and the takeover of Eviosys Packaging Switzerland GmbH by Sonoco Products Company for €3.6 billion.
Number of megadeals virtually unchanged
In the first half of 2024, 15 megadeals with a transaction value of more than one billion euros took place in the DACH region. The number of transactions of this size has thus remained roughly the same over the past three half-year periods. The megadeals contributed to an increase in the total transaction value in the first half of 2024 compared to the previous half-year, although fewer transactions took place overall.
Large deals with a value of between 250 million and one billion euros accounted for 2.5 per cent of all deals in the first half of 2024. Their share thus remained virtually unchanged compared to the previous half year. Medium-sized deals (between €50 million and €250 million) accounted for a good 7 per cent of all transactions, slightly more than in the second half of 2023 (4.2 per cent). The share of smaller transactions with a value of less than €50 million remained unchanged compared to the previous half year at just under 27 per cent.
Financial investors at an advantage
Financial investors were responsible for 53 per cent of all transactions in the first half of 2024, while strategic investors accounted for 46 per cent. This means that the shares of the two investor groups have roughly reversed compared to the five-year period (1st half of 2019 to 1st half of 2024) (47 vs. 51 per cent). The resilience of financial investors is demonstrated by the fact that they continue to make deals and will do so through alternative financing models.
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PwC Study: DACH M&A Deals Insights – H1/2024
EBITDA Multiples at their lowest level for the past five years
The average EV/EBITDA multiple fell to 8.4x in the first half of 2024. In the previous half-year, it was 11.4x, and in the first half of 2023 it was 10.6x. The average EV/EBITDA multiple for the first half of 2024 is also the lowest recorded in the past five years.
Due to the negative macroeconomic development, persistently high interest rates and geopolitical uncertainties, financial investors are acting cautiously and exiting investments less frequently. In order to achieve a turnaround on the M&A market, investors need to carry out more successful exits again so that funds can flow back to their shareholders.
German share of deals declines
71 per cent of the transactions recorded in the first half of 2024 took place in Germany, 22 per cent in Switzerland and 8 per cent in Austria. The proportion of transactions that took place in Germany in the past six months was therefore significantly lower than the figure for the five-year period from the first half of 2019 to the first half of 2024 (75 per cent). In contrast, more transactions took place in Switzerland (18 per cent) and Austria (7 per cent) in relative terms. However, the absolute number of transactions fell in all three countries in the first half of 2024 compared to the previous six months.
The M&A market in the DACH countries
- M&A activity in Germany
- M&A activity in Austria
- M&A activity in Switzerland
M&A activity in Germany
In the first half of 2024, the number of transactions in Germany fell by almost 20 per cent to 887 compared to the previous six months (H2 2023: 1100). This is mainly due to the continuing high level of economic uncertainty in Germany. High interest rates are also slowing down development on the M&A market. By contrast, the value of transactions rose from 33.4 billion to 40.6 billion euros – an increase of almost 22 per cent.
M&A activity in Austria
Due to rising inflation and major geopolitical uncertainties, M&A activity in Austria fell sharply in the first half of 2024. The number of transactions fell from 111 to 94 compared to the previous six months, a drop of a good 15 per cent. The transaction value slumped by almost 70 per cent compared to the previous six months: from €5.3 billion to €1.6 billion. The slump can be explained by the fact that, for the first time since 2020, the Austrian market did not record any mega deal, a transaction with a value of more than one billion euros, in the first half of 2024.
M&A activity in Switzerland
The M&A market in Switzerland remained stable compared to the previous half year: the number of transactions fell by just under 3 per cent from 279 to 272, while the transaction value increased by around 10 per cent (from 16.6 to 18.3 billion euros). However, the number of deals with a value of more than one billion euros rose from 2 to 7.28 per cent of Swiss transactions took place in the TMT sector, while the IM&A sector accounted for around 17 per cent of transactions.
“The negative macroeconomic situation and persistently high interest rates slowed down the M&A market in the DACH region in the first half of 2024. However, there are signs that the market has bottomed out.”
Steve Roberts,PE Leader Germany & EMEA at PwC GermanyDownload now
PwC study: DACH M&A Deals Insights – H1/2024
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The methodology
This report analyses the transaction activities of foreign and German investors. The data on which the analysis is based comes from Unquote and Mergermarket and includes all deals announced in the respective years in which the target company comes from Germany, Switzerland or Austria.
Our analysis takes into account all mergers, acquisitions and disposals, leveraged buyouts, spin-offs, privatisations and acquisitions of minority stakes announced between 1 January 2024 and 30 June 2024, excluding those deals that have been cancelled or aborted in the meantime.
The contents of this publication are intended for the information of our clients. It reflects the authors' state of knowledge at the time of publication. For solutions to relevant problems, please refer to the sources listed in the publication or get in touch with the contacts mentioned. Opinion pieces reflect the views of the individual authors. Rounding differences may occur in the charts.
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