The M&A sector in France has faced challenges in 2024 due to political and fiscal uncertainties, despite positive global signals. While significant deals have occurred, activity levels remain below 2020 and 2021 peaks. Domestic transactions are thriving, accounting for half of the top deals, with optimism for increased M&A activity expected by 2025 as conditions stabilize. However, foreign investment interest has waned amidst ongoing uncertainties, prompting investors to consider alternative markets.
Current Landscape of Mergers and Acquisitions in France
The mergers and acquisitions (M&A) sector in France has been sluggish throughout 2024, primarily hindered by political and fiscal uncertainties that peaked in the second quarter. Despite this, global signals have shown promise, with central banks relaxing monetary policies and stock markets performing well. The anticipated soft economic landing in the United States adds to a cautiously optimistic outlook, as noted by financial data expert Dealogic, who emphasizes that negotiators are hoping for a robust end to the year.
Challenges and Opportunities in the Market
However, the situation in France remains complex. Céline Méchain, co-head of Goldman Sachs’ Paris office, described the M&A market as being in a state of recovery, highlighting that while there have been some significant deals, the activity levels are nowhere near the peaks witnessed in 2020 and 2021. The year 2021 set unprecedented records following a strong economic rebound after the pandemic-related lockdowns.
Despite a challenging landscape in 2023, 2024 has seen a resurgence of corporate transactions, according to Jérôme Morisseau, co-director of Bank of America’s investment banking in France. Nonetheless, the market for funds remains subdued, although there are indications of a potential uptick. Investors face pressure to act as many assets have been held by funds for extended periods, some for as long as eight years.
Uncertainties surrounding the fiscal environment pose significant barriers for foreign companies looking to invest in France. A representative from a prominent business law firm in Paris noted that many investors are hesitant and may opt for alternative countries if conditions do not stabilize soon. Following the political upheaval announced by Emmanuel Macron, foreign interest in France has noticeably declined, with investors expressing a desire to wait for more favorable conditions before re-engaging.
Despite these challenges, domestic transactions have provided a lifeline for the M&A market, accounting for half of the top 20 deals this year. For instance, BNP Paribas’ acquisition of Axa’s asset management division for €5.4 billion in August highlights the ongoing activity within the financial services sector, which has performed well in contrast to sectors like healthcare.
Looking ahead, experts remain hopeful. Many predict a surge in M&A activity by 2025, particularly in the latter half of the year, as the market begins to stabilize and uncertainties start to dissipate. This optimism reflects a belief that while the current environment is tough, opportunities for growth and expansion will emerge as conditions improve.