Trends in M&A 2024

2023: A year for deepening relationships

Whilst the past year proved to be very challenging for business owners, management teams and investors alike, with interest rates rising to their highest levels in 15 years, a continuing cost of living crisis and increasing geopolitical conflict, we have continued to focus on strengthening the deep and unique relationships we have with our clients. In October 2023, we officially launched the Charles Russell Speechlys Private Office. This new pioneering initiative, ran by a team of non-lawyers with expertise across global finance, real estate and luxury investment assets, caters for the changing demands of global private capital clients, entrepreneurs, families, and their businesses.

With inflation now being brought under control in the UK, and new and exciting technologies sweeping across all our media feeds, we are looking forward to 2024 with optimism and much anticipation. In particular, we’re expecting three trends to be on everyone’s radar in the M&A space this year: a focus on acquisitions and investments in the IT services and software sectors, increased use of technology in the M&A process, in particular, generative AI; and ESG.

Acquisitions and investments in the IT services and software sectors 

We found that there was a strong focus on M&A and investment into the IT services and software sectors throughout 2023, despite challenging economic conditions. As companies continue to tech enable their services and transform IT systems and processes, business enabling such digital transformation are thriving. 

We have an abundance of business technology law expertise, and we have had the opportunity to work with some innovative, technology-specialist clients in the last year. These include:

• the management team of high-growth client Zenzero, on its majority acquisition by Macquarie Capital Principal Finance. Zenzero provides future-ready managed IT, cyber, data and digital services and its platform combines next generation IT managed service providers with leading technology capabilities.
• Nortal, the multinational strategic change and technology company, on its acquisition of Quester, one of the leading international software development companies that design, build and manage dedicated teams over a diverse set of technologies in various industries.

With new technologies, such as generative AI, sweeping the market, we expect companies to continue their digital transformations throughout 2024, and as a result, acquisitions of and investment into businesses enabling such transformation shall remain strong. This will include a focus on digital infrastructure, as new technologies put increasing computational demands on data centres and stretch existing network infrastructure. This is an area where we have been active at an international level and, in December 2023, we advised joint clients Development Partners International and Verod Capital Management on their strategic investment into Pan African Towers, Nigeria’s leading provider of digital infrastructure. 

Use of technology in the M&A process

The legal technology market is booming at the moment, with vendors on the phone almost daily looking to demo their new products. Over the coming year we expect technology to be increasingly leveraged throughout the M&A process, from enhanced due diligence practices to single click transaction bible production. 

We have a strong innovation culture and a track record of leveraging new technologies, methodologies, and creative thinking to provide even greater value to our clients. In 2022, the firm was shortlisted in the ‘Business of Law: Using Data’ category at the FT Innovation Lawyer Europe Awards. The Firm was recognised for the corporate team’s use of AI platform Luminance to identify share purchase agreement trends in the private M&A market. An interesting and valuable project which was repeated in 2023 with much success. The focus on AI is widespread across the legal market and, in particular, generative AI may be just about to reach the peak of the hype curve. Generative AI is exciting for lawyers and their clients as it is able to generate new output based on patterns learned from large data sets, and to present that data in a way that is meaningful to the user.

We are seeing generative AI being incorporated into many existing, more traditional, legal technology products, as well as completely new concepts. With the Solicitors Regulatory Authority and the Law Society actively engaging with AI and the challenges it poses in legal practice, we fully anticipate that widespread use of generative AI across the legal profession is just around the corner. 

The legal issues associated with generative AI and its deployment are complex, as new laws and regulatory models are being developed and brought into effect. Our Firm, a multidisciplinary team of sector expert lawyers that can support clients dealing with these rapidly developing complex issues. We recently published our AI Business Guide which aims to help both in-house lawyers and senior executives in improving their understanding of AI and some of the key legal issues associated with it. For an excellent summary of what’s to come on the AI front in 2024 our Intellectual Property and Commercial Knowledge Development Lawyers, Louise Zafer and Michelle McCulloch, have pulled together this note which covers both forthcoming UK & EU legislation, as well as important litigation cases to watch.

In another boost to our AI credentials, in December, we were very pleased to welcome on board Joe Cohen, as Director of Innovation. Joe is one of the foremost legal innovators in the City of London, with a proven track record of driving successful client-focused innovation initiatives.

ESG

As a Firm, ESG is something we are very passionate about. We take our responsibility to society at large seriously and the concept of making a positive contribution for all our stakeholders is embedded within our culture. Across our practice we work with businesses, investors and managers, across all sectors, to help them navigate the rapidly evolving ESG landscape.

We have found over the last 12 months that ESG is playing an increasingly important role in M&A and we anticipate that in 2024 ESG will remain a hot topic. We envisage this impacting the M&A process in a number of ways, including more ESG focus by acquisitive companies when identifying acquisition targets, a greater emphasis on ESG related issues during the commercial, legal and financial due diligence processes and the further development of market standard ESG clauses in share purchase agreements.

With the upcoming Spring Budget and a General Election thrown in, 2024 is set to be an interesting one. David Coates, Head of Corporate, has also been making some predictions about the 2024 transactional landscape and taking a look back at some of our highlights in the second half of 2023, which can be found by clicking here.