Business leaders set to sell off portfolios, suggesting deal making spike

Business leaders are reporting a strong interest in shifting parts of their portfolio over the next year, potentially leading to a spike in new mergers and acquisitions, City A.M. can reveal.

79 per cent of business leaders surveyed by Deloitte globally said that they were planning to make at least three divestments over the next eighteen months, versus 41 per cent two years ago. Only one per cent said they had no intention to sell any part of their business.

Despite the high number looking to sell, the group were also optimistic about how much they could sell for, with almost two thirds stating they had received a higher-than-expected price for assets in their most recent sell. This compared to just 41 per cent in 2022.

The reasons for a shifting of portfolio different a lot amongst the business leaders: 40 per cent cited a changing regulatory environment and tax regime, 39 per cent cited shifting market conditions, 35 per cent stated that the business was no longer a part of their core business, and 35 per cent will look to divest due to activist shareholders.

However, 98 per cent said they had abandoned a sale in the last month, suggesting that companies need to do more to ensure they are ready to sell off parts of their portfolio.

The top reason given was a change to internal strategy (37 per cent), but external factors such as a lack of buyer interest (35 per cent), changes in the competitive environment (34 per cent), and regulatory challenges (33 per cent) were also factors.

This is not just theoretical: Three fifths of business leaders said they were now assessing their readiness to divest at least twice a year, up from 54 per cent two years ago.

If the business leaders follow through on their intentions, this could lead to a wave of new M&A for the economy at a time when deals have sunk to pandemic-era low.

Jason Caulfield, partner and UK head of divestitures at Deloitte, said: “Many businesses haven’t divested for some time and are in the process of readying themselves to do so.

“With anticipated interest rate reductions, opportunistic buyers will be waiting in the wings and those who can move now will do so to snap up good deals before valuation expectations reset.”