After a slow-down due to the war in Ukraine, 2023 is witnessing a notable resurgence in the Spanish M&A market. There is still much uncertainty, and this is resulting in a more cautious attitude in transactions.
A promising start
Despite the challenging environment since March, M&A has undergone substantial revitalization, with aggregate deal values in excess of EUR22 billion. This resurgence gives cause for optimism for the second half of the year, although it is early days and there is also a trend towards longer negotiation times, as well as increasing dependence on earn-out clauses, where price is linked to future performance.
Top industries for M&A activity
The energy sector is leading this resurgence, attracting mainly sovereign and infrastructure investors which seek modest returns compared to what private equity traditionally expects.
The agricultural sector has also seen significant activity, particularly with the reactivation of the sale of a well known soft fruit company in April, setting a positive precedent for future transactions.
Prominent players and strategies
Different entities have had a significant role in the market upturn, facilitating significant sales and acquiring key companies in the renewable energy sector. The success of bond emissions is another positive development, indicating adjustment to a more strict financial environment which is still favourable for significant investments.
Parallel to this, we have witnessed the re-evaluation of exit strategies, with both direct sales and listings as possible outcomes for the near future, showing a diversified and flexible financial outlook.
Strategic investments and renewed confidence
Renewed confidence in the local market is illustrated by the active participation of prominent financial entities in substantial transactions. This includes significant investments by international funds in local companies, with the environment sector a key target which has attracted investments in excess of EUR1 billion.
A busy June
June stood out for a series of takeover bids with attractive valuations, and the successful completion of relevant sales which point to a dynamic market which is open to substantial offers.
Outlook for the coming months
As we approach the second half of the year, the focus is on ongoing sales, with the health and technology sectors especially active. There is particular interest in fertility clinics, and we expect significant opportunities in the digital sphere, including ambitious plans by well known sports companies to trade in the stock exchange.
The energy sector remains a focal point, with transactions in excess of EUR6.7 billion, illustrating a market which remains optimistic and dynamic, and promising a solid and sustainable economic recovery as the year draws to an end.
In this climate of resurgence, the Spanish market is in a strong position. It promises a fertile environment for strategic investments and a solid, sustainable economic recovery for the coming months.