Swiss deal appetite fueled by transformation

in Advisory, 16.01.2018

Innovation and transformation. Two words that are often overused. Yet it is no exaggeration to say they are highly relevant to today’s Swiss M&A scene. In fact, they are helping to drive forward M&A in key sectors such as Food and Drink, Pharmaceuticals and Media. In our latest annual review of deal activity involving Swiss businesses, we assess how and why they are fueling the growing appetite of Swiss dealmakers.

In a year that saw Johnson & Johnson focus its largest ever acquisition on Switzerland, Nestlé undertake some telling moves into retail and healthcare, and the NZZ and AZ media groups form a significant new joint venture, two themes bind these transactions together. They are all innovative. And they are all transformative.

Consumer tastes and expectations are evolving, with the result that demands on retailers, manufacturers, media providers and many other industries are changing rapidly and fundamentally. In part, the deals we saw in 2017 are responding to trends that are already happening in the market. And in part they reflect the forward-thinking attitudes of Swiss businesses as they anticipate upcoming developments.

In Food and Drink, for instance, customers increasingly expect goods to be not only tasty but also healthy, ethical and socially responsible. Our fascinating interviews with Migros and Farmy cast a spotlight on how businesses are approaching this issue. And we look at what more needs to be done for businesses to remain ahead.

Feeding the M&A market

Nestlé’s acquisitions of vitamin producer Atrium Innovations, premium coffee retailer Blue Bottle Coffee, and plant-based food manufacturer Sweet Earth, are three examples of how these trends are playing out on the M&A scene. But Nestlé is not alone in undertaking new types of transactions in order to realize growth ambitions. Considerable portfolio repositioning took place among Switzerland’s top Commodities traders last year. And Partners Group’s USD 1.4 billion purchase of the UK’s Civica Group was part of a record year for Swiss Private Equity that saw the highest levels of fund-related deal activity for more than ten years, with the balance shifting clearly towards acquisitions.

Small can be powerful too

If there is one thing that always strikes me, however, it is that innovation and transformation permeates through all levels of Swiss industry. Moves by the largest multinationals may grab the headlines and attract most comment. But there are countless hundreds, if not thousands, of small and mid-sized enterprises that are working hard to continually innovate, advance and improve. Some of these businesses will emerge as the industry leaders of tomorrow. Others are providing solid contributions to the direction of travel in their respective industry.

As our attention turns to what 2018 will hold, one thing is clear. Swiss firms have a strong appetite for growth, and M&A is a key tool to satisfy this hunger. Across industries, across company sizes, across Switzerland and beyond, this year looks set to deliver more transformation as firms continue to strive to meet customers’ evolving expectations. And to do so more and more innovatively.

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