Nordic Deal Trend Report Q1 2024

Welcome to the latest edition of the Danish version of KPMG’s Nordic Deal Trend Report where we explore deal activity in Denmark and across the broader Nordics throughout the first quarter of 2024.

As we delve into the number of announced deals since the beginning of the year, it is evident that M&A activity has had a somewhat slow start of 2024 – at least from a number of deals perspective. Compared to the final quarter of last year, with 759 deals, in Q1 527 deals have until now been announced. This is the slowest start of a new year since 2020 and, in fact, the lowest quarterly announced deal level over the preceding three years.

As touched upon in one of reports of last year, concerning the sense of realism between buyers and sellers, leading to increased strategic discipline and heightened financial deal scrutiny still seem to have a weigh-in and shape the current M&A landscape. Another of the current large obstacles in getting the deals penned is the price-expectation difference between the buyer and seller parties – plainly put, the valuation levels of companies have not fully adapted to the current business environment, as sellers are still holding onto the higher valuations seen during the low-interest rate period prior to 2023 when interest rates started to take off.

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Looking at the distribution of announced deals made up by industry segment, this is one thing that remains consistent with previous quarters, though. The tech sector retains its leading position and has, actually, increased its overall share of deals this year, now totalling more than a quarter of all announced deals. Following tech, in the same order as the previous quarter, are manufacturing (16 %), construction and real estate (13 %), and consumer markets and energy (at 10 % and 8 %, respectively). In summary, the top-5 sectors collectively account for just above three quarters of the announced deals in the first months of the year – nothing new there.

Speaking of tech, KPMG recently co-hosted a Nordic M&A conference focusing on artificial intelligence. The event featured a dynamic panel of experts who provided valuable insights into various aspects, including M&A market trends, the future trajectory of AI, its role in investment decisions, AI companies as investment opportunities, and the intricate regulatory landscape surrounding AI. Interacting with participants at the conference, we gained some insights that may form the near future of M&A in our part of the world. Even though the price-expectation discrepancies between buyers and sellers still prevail, our impression is that concerns on recession and the macro-economy, expected more favourable financing opportunities due to more stable and lower inflation levels are starting to alleviate in the M&A community and that there is a cautious optimism as a growing majority of dealmakers expects an increase in transaction volume in the remainder of the year.

Perhaps underpinning this more positive sentiment can be seen in the aggregate deal value. We note that the total, publicly announced deal value stands at EUR41.3bn in Q1 of 2024. This is the third highest over the previous six quarters and above the average per quarter since the beginning of 2022.

Sending you our best wishes for Easter, it will be interesting to see if buyers and sellers will be able to draw closer to each other on the value proposition and whether number of deals will follow and perhaps increase over the coming quarters or rest of the year.