We are pleased to present you with our latest edition of KPMG’s Nordic Deal Trend Report – this version specifically tailored for our Danish audience. Our report provides comprehensive coverage of the deal-making landscape in both Denmark as well as the wider Nordics during the second quarter of 2023.
Noting that also the Nordic M&A market is currently grappling with inflation and higher interest rates, the current situation – and looking ahead to the near future – prospects are bright for deal-making in our part of the world. It seems there is a newfound sense of realism between buyers and sellers and that strategic discipline and financial scrutiny now drives deal activity to a higher degree.
Looking back at the two last quarters of 2022 and first quarter of 2023, we notice that announced number of deals level out around or just above 760 deals per quarter – from that perspective, we seem to have reached a fairly stable activity level quarter on quarter. Historically speaking, a fairly high level, mind you. As we conclude the second quarter of this year, the Nordic M&A landscape remains active with a total of 590 deals being announced. As touched upon in our latest report covering the first three months of the year, the post-pandemic M&A frenzy is easing into a more consistent deal level and the enduring rhythm continues in Q2 of 2023.
Sector breakdown by deal count Q2'23 vs. Q1’23
Despite the tumultuous times we live and operate in, the industry split of announced deals this quarter are as normal as can be. The tech segment continues to take top spot and has, actually, increased its total share of deals slightly in Q2 (27 %) compared to Q1 (23 %). Following tech, in the same order as previous quarter are manufacturing (18 %), services (13 %), real estate (11 %) and consumer markets and energy (both at 8 %). In essence, the top-6 sectors total 85 % of the announced deals in the quarter.
As noted initially, the sense of realism between buyers and sellers, the financial scrutiny and discipline getting deals done weighs in on the M&A market. On an overall level, we still see a lot of activity – also in our own post-summer pipeline – but processes typically do take longer to bring to signing than what was normal a year ago. The top-three takeaways we encounter in our dealings with buyers, sellers, investors and other deal stakeholders are that sellers are preparing earlier and getting due diligence providers into the process well ahead of the deal. Secondly, it is increasingly challenging to get financing in place due to interest rates driving financing costs upwards, we note that credit funds are on the rise. Lastly, buyers and sellers are willing to delay processes if they feel the value proposition is not there and, also, buyers are being more insistent to have exclusivity or preferred status in the deal processes at hand.
Although M&A activity has decreased from its peak in 2021, the market in the Nordic regions is more than robust by historical standards. Additionally, we predict that the new business landscape, characterised by more thorough due diligence, stricter financial discipline, and a heightened emphasis on long-term strategic value, will not only foster sustained growth but also result in a healthier market with more profitable outcomes for both companies and investors.
Wishing you a great summer with time off, and we look forward to seeing what the rest of 2023 will bring from an M&A perspective.
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Jan Hove Sørensen
Partner, Head of Corporate Finance
KPMG in Denmark
Dale Treloggen
Partner, Leder af Transaction Services
KPMG in Denmark
Stig Meulengracht
Partner, Transaction Services
KPMG in Denmark
Jakob Lumholtz
Manager
KPMG in Denmark
Kathryn Alexis Jörgensen
Partner, Transaction Services
KPMG in Denmark