Cross-border M&A fell to $1.57 trillion worldwide in 2022, down from an all-time high of $1.7 trillion in 2021, according to Pitchbook, a financial database. The number of international deals actually dropped to 9156, a total decline of 11%.

But from a broader perspective, it’s not particularly bad news. As a comparative trend, cross-border M&A transactions are still higher than they have been historically, in spite of the more recent—and potentially temporary—slowdown.

Current economic and political challenges have created a combination of factors that have fueled uncertainty, caution, and a bit of a “wait until the storm passes” attitude in the minds of buyers, sellers, and financial lenders worldwide.

Three trends particularly stand out:

  1. Steadily increasing interest rates, combined with decreased availability of debt in certain regions, had an overall tempering effect on dealmaking last year, and to some extent, it still does in 2023.
  2. Geopolitical events, most significantly the war in Ukraine, took a measurable toll on international transactions—and confidence.
  3. Concerns about the impact of inflation worldwide add even more fear and hesitancy when it comes to cross-border M&A decisions.

Despite the recent slowdown, long-term trends in cross-border M&A are clearly upward

Long-term growth in cross-border M&A is driven by two major buyer groups:

  1. Large corporations who continue to expand their businesses into foreign territories and find that M&A is a faster and more certain way to gain access to new markets, rather than going “greenfield”.
  2. Private equity firms also increasingly deploy international buy-and-build strategies to accelerate the value creation process, especially after having acquired a first-platform company in a given industry.

PE firms have learned that breaking into new markets and turning a national leader into an international player has a directly positive effect on valuation levels when selling the company.

New Challenges, New Opportunities

This is not to say, however, that everything is rosy in the international M&A arena, nor is it by any means simple.

International mergers and acquisitions are driven by various factors, like reducing competition, penetrating new markets, diversifying product lines or services, and gaining rights to intellectual property such as patents, trademarks, and copyrights.

As a result, international M&A often follows trade. Most cross-border transactions take place between countries that do a lot of business with each other. And from a mid-market perspective, I estimate roughly 1/3 of M&A transactions are cross-border in the sense that the buyer and seller come from different countries. This number is typically higher in smaller countries like The Netherlands that are more accustomed to working internationally than their larger counterparts, such as the United States.

Manufacturing, consumer, and professional services have historically been sectors with high volumes of cross-border M&A, but during the last decade, technology, media, and telecom (TMT) have shown the largest increase in the number of deals and value.

The bottom line is that cross-border M&A adds further challenges to the already complex process that characterizes dealmaking. Cross-border transactions bring additional risk and complexity due to differences in cultural, political, economic environment, law, tax rules, and accounting, not to mention disparities in corporate culture itself.

But there is another bottom line to also consider. International M&A can offer a level of financial rewards and business growth that cannot be achieved by regional or national deals alone. More and more, M&A opportunities for mid-market companies are becoming increasingly international.

Cross-border M&A growth is good news for mid-market buyers and sellers who are looking for more strategic deals, increased market share, and worldwide expansion and growth.

Martijn Peters is Founder and Managing Director of DEX international M&A, a Netherlands-based company specializing in structuring and managing M&A transactions. He has broad experience as an international deal maker and currently serves as President of Globalscope Partners.

By Kevin Centofanti,
Brooks Houghton & Company, Inc.

In spite of inflation, a devastating war in Europe, and a volatile market for months, the US debt market was fairly robust at the beginning of this year.

But they sure didn’t stay that way for long.

As we get deeper into 2023 and the Fed continues to increase interest rates, the bar for borrowing money has grown precipitously higher, and approval rates for business loans have dropped significantly since the year began—especially for small and medium-size enterprises (SMEs).

According to the Biz2Credit Small Business Lending Index™, big banks have dropped their loan approval rates for small businesses from 14.4% in January 2023 to 14.2% in February. SME loan approval rates from small banks have dropped even more dramatically in the 1st quarter of this year, from 21.3% in February to 19.1% in March.

Along with the collapse of Silicon Valley Bank, Signature Bank, and First Republic Bank, the sense of uncertainty and unease in the lending market is currently—to say the least—precarious at best. What’s more, the fear of additional failures among regional and smaller banks continues to fuel fears among borrowers and lenders alike.

The House isn’t On Fire, but 2023 is an Incendiary Year for the US Debt Market

Although the Fed can’t ease off on increasing interest rates for now, business lending is still a viable means of raising capital today; however, unless businesses understand how the rules have changed in the current US debt market, higher borrowing costs could squelch—unnecessarily—what would otherwise be smart and timely business decisions.

Here are six trends that are impacting the debt market today and are likely to continue throughout the remainder of 2023.

  1. The bar for approval rates is now higher for all borrowers—SMEs and multibillion-dollar companies alike.
  2. Non-bank lenders may be more flexible and easier for SMEs to secure loans from, but they’re pricier than traditional banks.
  3. Companies that aren’t in a favorable financial position to ask for additional funding will find it difficult to secure favorable credit terms.
  4. The amount of funds from asset-based lending will be smaller, regardless of a company’s EBIDTA. This is being driven by lower valuations in the public and private markets. Overall, the trend will lower the borrower’s debt capacity.
  5. For sell-side transactions, instead of the traditional combination of 70% debt and 30% equity provided by private-equity investors, we’re now seeing something closer to a 50/50 debt-to-equity mix. This is forcing private-equity investors to put more money into their deals, which, of course, also drives down returns.
  6. Small and more nimble banks are more likely to offer better lending terms than larger ones, especially if these particular banks have deep experience in the borrower’s sector.

Not all of these trends are necessarily negative, and for the most part, inflation does seem to be slowing down overall. But as far as the US debt market is concerned, we’re still not out of the woods for the foreseeable future.

So, for any business or investor looking to raise capital this year, the best possible advice is to start the process now, rather than later, to avoid any lender pushback.

Will the US debt market be in a much stronger position than it is today by the end of the year? We think so, but it already offers opportunities—even if they’re fewer—for well-managed companies with solid business models to find the capital they need to achieve their 2023 funding goals.

Kevin Centofanti is President, Chief Compliance Officer, and Principal at Brooks, Houghton & Company, a New York-based merchant banking firm that provides investment banking and direct investment services to middle-market companies. As a member of Globalscope, Brooks Houghton offers access to a global network of experts who can help companies navigate the more restrictive lending environment businesses are facing this year.

Globalscope Holds Spring Conference

Names Martijn Peters as President; Adds Three New Members

LONDON—May 10, 2023—Globalscope Partners Ltd., a worldwide network of M&A firms specializing in middle-market transactions, has named Martijn Peters as its new President.

Peters succeeds John Sloan of Dallas-based Sloan Capital, who officially ended his two-year term as President during the 2023 Spring Conference held April 19-22 in Buenos Aires. Attendees came from 31 countries worldwide.

Martijn Peters is the Founder and Managing Director of DEX international M&A.

Located in The Netherlands, DEX specializes in structuring and managing cross-border M&A transactions for entrepreneurs, investors, and large corporations.

Other highlights of the Spring 2023 Globalscope conference, include the voting in of three new member firms:

Attendees also approved a new slate of directors to head the following roles:

Board members who will continue to serve in previous positions include:

Recoginizing seven partner firms for outstanding achievement was also a major high point of the event. Awards in three separate categories were presented to:

Most Active Members:

Most Valuable Deal:

Flagship Transaction Award for the deal involving two or members:

“Last year Globalscope members closed 203 deals with a combined value of $20,8 billion,” Peters said. “It was the highest total in our network’s history, and we’re continuing to make strategic moves we believe will accelerate our growth and development going forward,” he added.

Globalscope Spring 2023 Conference

Globalscope Partners holds Fall Conference, celebrates €17.5 Billion in M&A transactions, year-to-date

GLOBALSCOPE PARTNERS LTD. Gathered in Bangkok for their Fall 2022 International Conference, celebrating continued network growth and more than €17.5 Billion in transactions, year-to-date.

Globalscope Partners, a worldwide network of independent investment banking firms focused on M&A, was hosted for a four-day conference by member firm AWR Lloyd, Bangkok. AWR Lloyd has a 22-year track record providing M&A and strategy consulting services to clients across the Indo-Pacific region from the Middle East, through South and Southeast Asia.

During the event, members collaborated on more than 100 M&A opportunities in their cumulative worldwide pipelines, shared best practices for professional development, and held forums on trends and current industry landscapes from leading internal sector experts.

This Fall’s conference provided the Globalscope network an opportunity to strengthen connections with Southeast Asia, which inspires greater cross-border collaboration, trade, and investment. Guest speakers included Thailand’s former Finance Minister Korn Chatikavanij and Somruedee Chaimongkol, CEO of the Pan-Pacific energy group Banpu PCL. Each shared their insights on the conference theme of catalyzing the transformation of the region’s economies to greater sustainability.

Another conference highlight was the ‘Oscar’ Awards presented during the gala dinner. The following winners were recognized:

John R. Sloan, Globalscope President, welcomed the group to the semi-annual event. “These conferences provide our members the ability to leverage the strength of our network, accessing a global marketplace of potential investment partners that match their clients’ transaction opportunities.” said Sloan. “It also provides opportunities for individual member firms to learn new and better ways to enhance their services from fellow experts. This camaraderie and openness, drives us to each have tier-one professional services, delivering greater benefit to our clients.”

Globalscope celebrated continuing growth in its membership with Seedset Advisory, (Malaysia) being invited to join, as well as the approval of new member InCredMAPE, (India) a merger of previous member MAPE with InCredCapital.

Sector expertise within the network was expanded with the appointment of two new industry-sector heads, Consumer Co-Head: Cristina Bertolini, Pirola Corporate Finance, (Italy), and Business & Financial Services Co-Head: Martin Paev, SORTIS Invest, (Bulgaria).  Additionally, because of an increase in mandates and the depth of diverse knowledge among member firms, a new Energy Transition group was created that provides, specialized transactional facilitation expertise targeting the Energy industry.

Alexander Wood, CEO of host firm AWR Lloyd, noted, “The independent firms represented here are different from the bulge bracket banks and mainstream consulting groups many have come to know. Globalscope is a family of elite smaller firms who share a culture of agility, discretion, creativity, and resourcefulness. Our service is personal, normally long-term, and tailored to each client’s unique requirements” he said. “Going forward, AWR Lloyd intends to take a leadership role in the Energy Transition sector at Globalscope with a focus on renewable energy, e-mobility, energy efficiency, climate tech and critical minerals,” concluded Wood.

The next Globalscope conference is schedule to take place in April 2023, in Buenos Aires, hosted by member firm FICUS Advisory.

Globalscope Partners convenes for in-person conferences again, in Munich, Germany

For the first time in over two years, Globalscope Partners held their annual Spring Conference in Munich, Germany in late April 2022.    John R. Sloan, President, said “Travel restrictions from the pandemic had limited our semi-annual conferences to video forum only since the spring of 2020, like most other international networks.  These meetings are essential to the Globalscope experience, as they promote relationship building, which is a key element of our core values, and leads to mutual opportunities to better serve our clients”.  The membership of 55 independent investment banks focused on mergers and acquisitions, shared best practices, and reviewed over 100 pending mandates worldwide.  Notwithstanding the pandemic, the M&A environment has been robust over the past year with Globalscope members achieving record results on behalf of their clients. 

Martijn Peters, Head of Member Recruitment, officially welcomed 6 outstanding firms as new members.  These include Bondo Advisors, S.L. (Spain), SEAbridge Partners (Singapore), SXA Inc. (Japan), Pirola Corporate Finance (Italy), AWR Lloyd (Thailand), and (EFSA) East Side Financial Advisory (Serbia).  Mr. Peters said “We are delighted to welcome these new members, each of which possess the character, integrity, and expertise, that reflects our strict criteria and core values. All were unanimously approved and accepted by our family member firms.  Globalscope continues to search for successful and talented additions to strengthen the presence and expertise of our global family,”.

In 2021, Globalscope member firms closed a record 226 transactions with an aggregate transaction value of over $8 billion USD.  At the gala dinner in Munich, members celebrated with our traditional “Toast to Liquidity” announcing our Outstanding Achievement Awards in the following categories:

Globalscope In-person Conferences Again Munich