Deal-making maintains Switzerland’s global relevance

in Advisory, 16.01.2019

Financial Services. Consumer Markets. Technology, Media & Telecommunications. Power & Utilities. Private Equity. The range of sectors in which Swiss deal volumes hit new highs in 2018 is remarkable. And following strong performances in 2017, this is not a one-off event. Rather, it demonstrates the firepower of Swiss industry, which punches above its weight on the world stage. This is one of the insights revealed by KPMG’s study Clarity on Mergers & Acquisitions.

2018 did not yield the kind of mega-deal we had become used to seeing in previous years. However, at between USD 8.7 billion and USD 13.0 billion, the three largest transactions last year involving Swiss businesses are still on an extremely respectable scale.

Swiss businesses grow their global presence

One of the things I find particularly interesting is that the balance of deals tips heavily in favor of outbound transactions, at around double the number of deals flowing into Switzerland. In fact, Swiss businesses completed 230 acquisitions of foreign entities, compared to foreign businesses purchasing 117 businesses in Switzerland. In other words, Swiss businesses are the acquirers rather than the acquired – steadily growing their presence in markets around the world.

Transformation and portfolio reshaping remain key drivers

A considerable amount of activity is due to changing consumer behaviors and rapid advances in technology. This includes businesses adapting to i4.0 – the ‘fourth industrial revolution’ – which is being propelled forward developments in artificial intelligence. The pressure remains strong on management to continue transforming operations and reshaping portfolios to focus on where businesses can add true and sustainable value. Such moves saw Financial Services firms invest in technology players such as payment solution providers, and in other areas close to core businesses to enhance their roles in their ecosystems. And we saw further activity by Retailers who are seeking to redress the balance with online rivals.

The tricky piece of our analysis is of course anticipating what the future holds. While no-one can know this with certainty, I remain extremely optimistic given the robust Swiss fundamentals we have seen in recent years. There are some clouds on the horizon, such as possible further tensions between the US and China, and interest rates across the EU and the US continue to climb. But my personal view is that these will not be enough to dampen the enthusiasm of Swiss deal makers to pursue interesting transactions. Actually, allow me to modify that statement slightly, as it’s not only about enthusiasm, it’s about the need to grow and develop if Swiss businesses are to continue expanding their influence around the world in their chosen fields. And that trend shows no sign of slowing down.

Clarity on Mergers & Acquisitions in 100 seconds

 

 

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