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Belgian mergers and acquisitions market shrinks for second consecutive year




Results from the M&A Monitor 2024 show that the worldwide market in mergers and acquisitions declined in 2023, and this trend was also seen in Belgium. There were not only fewer transactions, but the average transaction price dropped slightly across all size segments.

The main causes of this were rising interest rates, macro-economic shifts and geopolitical instability. Noticeably, however, the proportion of foreign transactions remained stable. Almost 75% say that the deal process has become progressively slower, now taking over six months on average. Finally, ESG has become more important in investment policies and companies are increasingly looking to data analytics to help in the decision-making process.

These are the most important conclusions of the 11th edition of the M&A Monitor, an annual survey of 138 Belgian mergers and acquisitions specialists, including corporate finance advisors, private equity investors, strategic advisors, bankers and lawyers, who together represent all sectors and transaction sizes. The study explores their experiences of deals in which they were involved in 2023, as well as their expectations for 2024. 

The M&A Monitor was carried out by Professor Mathieu Luypaert and researchers Sarah Muller and Tom Floru from the Centre for Mergers, Acquisitions & Buyouts at Vlerick Business School, in conjunction with BDO, Bank Van Breda, Van Olmen & Wynant and Wallonie Entreprendre. A falling trend in acquisitions market persists in comparison with the record year of 2021, when almost 6 billion dollars was spent on takeovers across the globe, 2023 – like 2022 – witnessed a significant decline.

The total deal volume in 2023 was around 3 billion dollars, which is roughly the same as it was about a decade ago. This worldwide decline was also reflected in the Belgian M&A market. Two thirds of respondents saw a drop in the number of transactions in 2023, with 45% seeing a decrease of over 10%. The falling trend was most visible in large transactions (> €50 million) and transactions financed by private equity.

But small transactions (< €5 million) also proved vulnerable to the rising interest rates, macro-economic shifts and geopolitical instability in 2023. 46% in that segment saw a decline, compared to 33% in 2022.The proportion of acquired foreign targets remained surprisingly stable (32% of the total deal volume), meaning that the rising external risks did not outweigh the advantages of international deals. Opportunities in better-performing markets are potentially a way for investors to diversify their portfolios. 


Alexi Vangerven, Partner at BDO Belgium: “In 2023, we indeed saw more caution in the acquisitions market. That not only impacted the number of transactions but also the processes behind them. Recent figures show a growing demand for professional support. In 2024 we see many companies playing catch-up – there is once again a great deal of enthusiasm for investment and the necessary funds are available. Businesses with a strong position in the value chain are the most sought-after. The results of the study also confirm this uptick: 81% anticipate no further decline in 2024, and in the large deal segment, no less than 75% expect to conclude significantly more deals.”

Valuations also dropped slightly across all size segments, an average of 6.4 times the EBITDA valuation (i.e. the operating cash flow) was paid to take over a business in 2023. This was slightly less than in the record year of 2022 (6.7 times). This decline was visible across deal segments, except for smaller deals (< €5 million), for which the multiples have remained remarkably stable over the last four years.Deals above €100 million actually saw a rise in 2023: on average, 10.2 times the EBITDA valuation was paid, compared to 9.1 in 2022. 

We still find the highest multiples in technology (9.2) and pharma (8.9), although the values have fallen slightly. Retail, logistics and construction prop up the list, with an average multiple of 5. Dominic Dhaene, Expert in Conveyance and Succession at Bank Van Breda: “The 'sky's the limit' period is over, with both buyers and sellers adjusting their expectations. While the rising costs of debt financing have had a negative impact on valuation, the multiples have remained the same for a decent target. And for a target with a stable or growing EBITDA, companies can still find takeover financing. The study showed that, to finance an acquisition in 2023, approximately 3.2 times the EBITDA could be borrowed at an average interest rate of 4.7%.”

Almost 3 out of 4 respondents say that the average time to reach a deal in 2023 was longer than 6 months (against 53% in 2021 and 60% in 2022).Luc Wynant, Partner at Van Olmen & Wynant: "From our activities in corporate law we have seen a noticeable increase in the length of time it's taking to conclude deals in Belgium. This is a strategic consequence of the growing regulatory complexity as well as market insecurity. To manage these changed market conditions, extensive due diligence and careful negotiations are crucial.”

ESG and data analytics are becoming more important. 84% of private equity investors include ESG in their investment policy, compared to just 38% two years ago.In terms of data analytics, the respondents mainly see added value in the initial phases of the deal process: in the search for and screening of targets, data can provide insights into sector trends, the financial position of targets and potential synergies.42% say that a lack of expertise is holding back the implementation of data analysis tools and techniques in M&A.

Mathieu Luypaert, Professor of Corporate Finance at Vlerick Business School: “ Although the benefits of data analytics are clear, for many respondents it remains uncharted territory. 80% say that they have some familiarity with it, but assess their competence in it as rather limited. The added value seems to be greater for buyers, who see the advantages data analysis can deliver in terms of time, costs and accuracy, and as a tool for the decision-making process. For sellers, data can help to identify potential buyers and – to a lesser extent – can also have a positive effect on the selling price. The biggest obstacle is the limited access to relevant data, followed by issues with the quality of available data, which sometimes proves insufficient, incoherent or incorrect.

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