Dealmaking across Europe has not been easy over the first half of 2023 as the same headwinds that dampened M&A in 2022 – high inflation, rising interest rates and the Ukraine war – continue to weigh on market sentiments. As a result, deal value in 1H23 cascaded to a five-year low and overall deal volume has likewise slipped.

For all the challenges facing dealmakers, there are some signs of green shoots emerging. Macroeconomic volatility remains a risk, but deals remain relatively robust and safely above pre-pandemic levels and a recovery in Q2 2023 deal value bodes well for M&A.

Indeed, this rebound could be a sign that although uncertainty remains, markets may be bottoming out, leaving dealmakers with clearer visibility on the future earnings of target companies and better placed to price risk.

This report looks at the trends and challenges shaping the market for M&A in Europe in 2023 and beyond, providing insight into new opportunities and where they can be found. 

Key highlights include:

• Europe M&A drops: Deal value in 1H23 cascaded to a five-year low of US$280bn, a 52% decline from US$594bn in 1H22. Deal volume has likewise slipped, down 17% from 1H22. 
• Mid-market drives deals: With abundant consolidation prospects, quality companies and pockets of value, the European mid-market promises to remain a hotbed of M&A activity. 
• Foreign interest. European assets, technology and intellectual property – particularly in the mid-market – continue to present compelling value for overseas buyers. 
• Spotlight on tech: Ongoing digitalization and sustainability megatrends are increasing demand for nimble mid-market technology providers in emerging fields.

The report is also available at bakertilly.global