WTW has released its latest Global Transactional Risks Review and Outlook, indicating that the theme of “adaptation” continues to resonate within the global mergers and acquisitions (M&A) insurance market. The report projects that the cautious sentiment observed in the market last year, driven by a volatile economic landscape and prudent investment strategies, will persist into 2024.
The review outlines various factors that have led to a slowdown in M&A transactions. Among these are heightened interest rates, geopolitical instability, and persistent disruptions in supply chains, which have collectively imposed significant challenges on deal-making processes. A notable disparity in valuation expectations between buyers and sellers has also played a role in impeding the finalisation of deals.
The report further discusses the ongoing economic conditions, noting that although the spike in inflation has moderated in major global economies, stringent monetary policies continue to restrict leveraging opportunities for transactions. This environment, coupled with unpredictable geopolitical factors, is expected to sustain a cautious increase in M&A activities through this year.
Jeremy Wall, global head of FINEX (financial, professional, and executive), remarked: “For transactional risk insurance markets this has meant that provided they suffer no exposure to perceived problem jurisdictions or industries, insureds retain an excellent position with both pricing and risk appetite settling well off of historic averages in the favour of policyholders.”
WTW’s latest Global Transactional Risks Review and Outlook can be accessed here.
The document suggests a conservative approach will likely dominate in 2024. It anticipates that buyers, including private equity firms and corporate entities flush with cash, will remain vigilant over valuations and temper their expectations concerning a rapid shift to a bull market or a crisis-driven buying spree.
“Data plays an essential role in the effective use of risk transfer solutions,” noted Alex Keville, head of M&A and private equity for global FINEX. “WTW remains at the forefront in leveraging connected global insights and analytics to stay ahead of market trends.
“As a trusted global adviser, we emphasise the importance of consulting our experts, as early as possible in the deal cycle, to help navigate the complexities of M&A transactions ensuring informed decision-making and the enhanced ability to identify and mitigate risks using products such as transactional risk insurance.”
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