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Belgian M&A Survey 2021

In this changed world realising the deal value becomes more important than ever.

One year after COVID-19 kicked-in, we were curious about how the Mergers and Acquisitions (M&A) market in Belgium is shaping up and what the impact of the health crisis has been. We surveyed 111 key decision makers from corporate and private equity companies to find out about current M&A strategies and future M&A trends. 

Although certain sectors have been hit hard by the crisis (think of tourism, airlines, etc.), we see in many sectors, the M&A market is bullish, with high multiples and a very strong sellers market. Taking this into account, creating value post-deal is more important than ever before. This in combination with the increased attention to ESG as a value driver rather than simply a risk factor, creates an environment where dealmakers, who want to be successful, need to reinvent themselves and go much further than the traditional 100-day plan.

In the near future it is expected that the market will remain very active. However, it remains to be seen what will happen when inflation kicks-in and interest rises.

Outlook on the Belgian M&A Market for 2021

The pandemic period was used by both financial and corporate buyers to change their M&A strategy.

 



75%

of the financial players respondents and

63%

of the corporate respondents replied that they changed their M&A strategy.


What do you expect for the coming year in the M&A market?
(all figures in %)

Markets will heat up and prices will increase further
%
%
Stable market
%
%
Decreasing market
%
%

When analysing the appetite to do acquisitions in 2021, we remain very much in a seller’s market, as the appetite to buy is very big, for both corporate and financial buyers.

65% of the financial investors/respondents expect that the M&A market will further heat up and that consequently prices will further rise, where only half of the corporate respondents are of the same opinion. 

 

 

 

Financial Buyer / Seller

Corporate Buyer / Seller

      

Value creation beyond the deal

To create value, it is crucial that organisations approach deals as part of a clear strategic vision and long-term objective. The pandemic has shown that review and adaptation of a company’s overall strategy (and especially its M&A strategy) is key to survival.

Along with the strategic lens, timing is also of essence in the value creation process. Buyers should focus on value creation from the very start of the deal process, building on an integration plan that is ready to be executed as soon as a deal has been signed and preferably even earlier, so that any assumptions made about value creating opportunities can be tested during the due diligence phase.  Evolving towards an implementation of the value creating and integration steps needs to start right away at closing.

And let’s not forget the importance of the people element in bringing in the value! Creating value in a deal means bringing together the best of both worlds, of both cultures. This is a working plan to be executed from the screening phase, continuing into the due diligence phase and should finally be made concrete in the integration phase. Identifying key talents and developing a plan to retain and support them in the post deal phase is one of the most important value drivers in contemporary deals.

Qualitative due diligence is very important in terms of testing all the deal and integration thesis’ elements. The more deals evolve and acquire new capabilities, the more it will be important to expand due diligence.

One of the areas that may need more attention during a deals process in Belgium is cyber security and technology.

 

 

Why ESG matters in deals

In the deals environment, ESG, short for Environmental, Social and Governance, is the new kid on the block. ESG encompasses a broad area of topics ranging from carbon footprint, and environmental pollution to human rights issues in the supply chain, bribery and corruption and business ethics.

Performing ESG Due Diligence is a common practice in Belgium, with more than two-thirds of respondents carrying out at least one review.

 

49% of respondents indicate that risk management is the main driver for integrating ESG considerations in the Due Diligence process. PwC’s latest M&A survey shows that the motivations for doing an ESG Due Diligence vary greatly among respondents.

 

 

Financial Buyer / Seller

Corporate Buyer / Seller


Do you perform ESG due dilligence?
(all figures in %)

Yes, systematically and based on a standard ESG framework
%
%
Yes, systematically and based on our own ESG standards
%
%
Yes, often
%
%
Yes, sometimes
%
%
No
%
%

           


What is your main reason for integrating ESG in due diligence processes?
(all figures in %)

Risk and compliance management (value protection)
%
%
To identify new business opportunities (value creation)
%
%
Expectations from LPs and other investors
%
%
Pressure from civil society and other stakeholders
%
%

Performing an ESG DD is the first step to being able to monitor ESG performance, it sets the baseline for monitoring and improving the management of ESG risks and capturing ESG opportunities. The next step is leveraging the review work performed to identify, where relevant, ESG actions to be taken as part of the 100-day action plan. 

As methodologies become more sophisticated, ESG issues are increasingly taken up in action plans post-deal. This helps to protect and create value and demonstrates the importance of embedding ESG into the company and its strategy, such that it becomes purpose-driven and enhances value at exit.

 

 

Financial Buyer / Seller

Corporate Buyer / Seller



Download the full report

Nancy De Beule

Partner Mergers & Acquisitions, Brussels, PwC Belgium

+32 473 91 02 90

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