Supply chains: Global M&A trends and risks

Although this factor is mentioned by fewer respondents than either ESG or digital transformation, the need for resilient supply chains is nonetheless widely recognised – particularly given the impact of the pandemic and, more recently, the Russia-Ukraine war. “Selection of regions for expansion will depend on supply chain quality,” says the managing director of another France-based investment bank. “If there is inconsistency, then dealmakers will be sceptical about investing in these regions.”

Where some see problems, others see opportunities. In fact, most respondents view supply chain challenges as a deal driver. First and foremost, respondents expect to see an increasing number of vertical acquisitions as businesses race to shore up their supply chains. “In 2023, there will be more vertical acquisitions considered by corporate entities,” says the director of corporate development of a US-based company. “Since the supply chain flow is not ideal at this point, reducing these risks will be on the top of their agenda.”

Respondents also point to the relating topic of onshoring, or reshoring, in the wake of geopolitical and trade tensions. “Corporations will be considering onshoring for greater control of supply chain activity. In many regions, distribution has been affected because of natural resource and material shortage. Onshoring activities are more likely to increase because of these factors,” says the strategy director of a Japanese corporate.

While 2023 started off as a challenging year, lasting factors such as ESG, digital transformation and supply chain disruption will play an increasingly important part in driving deal flow. And as our survey shows, dealmakers are gearing up to capitalise on the opportunities that lie ahead.