‘M&A Trend Outlook’ Report Published and Seminar Held
“This Year’s M&A Strategy: Profitability Enhancement and Future Industry Transition as a Two-Track Approach”
As the mergers and acquisitions (M&A) market shifts to a recovery trend this year, more M&A opportunities are expected to be created. This is due to increased adaptability to inflation, high interest rates, and geopolitical conflicts, which has restored investment sentiment, along with the accumulation of assets for sale amid the prolonged market downturn.
On the 28th, Samil PwC announced this in its report titled "2024 Global M&A Trends: Industry Outlook." On the same day, a seminar on the same topic will be held on the 2nd floor of Samil PwC headquarters in Yongsan-gu, Seoul.
The report first stated, "Although inflation, high interest rates, and geopolitical conflicts persist, the adaptability of economic agents is increasing, leading to lower risk perception and a recovery in investment sentiment." In particular, amid the accumulation of assets for sale due to a two-year market downturn, the private equity market was found to hold a record high of approximately $4 trillion in dry powder commitments last year, suggesting that more M&A opportunities will be created. It also assessed that companies will continue to innovate and related M&A will persist to respond to megatrends such as digitalization, climate response, and demographic changes.
The report evaluated, "With an increase in M&A volume and a likely lowering of expectations for sale prices, this year is an opportune time for companies with abundant cash reserves and aggressive growth ambitions to pursue M&A." By industry, it is expected that M&A will remain active this year as in the previous year, driven by portfolio transitions toward carbon neutrality and securing critical minerals for supply chain stabilization in the energy, utilities, and materials sectors.
In the consumer goods, healthcare, industrials, and automotive sectors, portfolio transitions through the sale of non-core assets are anticipated. In the financial sector, soundness management has emerged as a key issue, leading to increased sales of non-performing assets and strengthened management of existing loans, resulting in relatively minimal M&A activity compared to other industries.
This year’s M&A strategy proposes a two-track approach: "strengthening profitability of existing businesses" and "transitioning to future industries." Profitability enhancement strategies include ▲achieving economies of scale through the sale of non-core businesses or corporate acquisitions ▲reducing labor costs and addressing aging through automation ▲diversifying supply chains. Future industry transition strategies suggest ▲climate response through energy transition and recycling ▲securing advanced technologies such as artificial intelligence (AI), robotics, and future mobility.
Park Dae-jun, Head of the Deal Division at Samil PwC, said, "This year will be a year when the previously subdued M&A activities overcome the darkness and begin to recover. We hope this report provides abundant insights to companies preparing for M&A this year."
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