Member Article

We organised Krogerus Transactions Forum 2024 on 18 September at Little Finlandia. The event brought together a wide audience of Finnish and international M&A experts and offered international insights on M&A trends and the significant potential of the Finnish economy. In this article, we will take a closer look into some of the forum's key topics through the following questions: Are we at the beginning of a new economic cycle? What does the future look like based on international M&A trends?

In contrast to the recent pessimistic narrative and media coverage on cross-border investments and economic recovery, Krogerus Transactions Forum took a proactive and optimistic approach to these issues. "Our aim was to move the focus from pessimism to realism and build upon positive trends and signals. Market conditions for transactions are improving, private equity is deploying capital and there is still a significant wall of exits in the pipeline", says Managing Partner Mårten Knuts. "With Krogerus Transactions Forum, we wanted to facilitate conversations around major economic and transactional trends and spark discussions on the further implementation of best international practices on our market", continues Krogerus' Head of M&A Marcus Möller.

The theme of the forum was Finland at the Dawn of New Beginnings. The programme was opened by a keynote from Frank Vang-Jensen, Nordea's President & Group CEO, who provided a Nordic perspective on Finland's current standing and relevance within the region. After that, we dived into international M&A trends with Luca Ferrari, Chairman of Mergers and Acquisitions for Europe, the Middle East and Africa at Bank of America. The speech was followed by a reflection board on the current economic climate. After that, the focus shifted to investments with an opening note by Peter Seligson, Chairman of the Board of A. Ahlström, with the theme What is wrong, but could become right in Finland. Finally, the last session showcased fantastic Finnish soonicorns and unicorns, presenting their optimistic ambition for global expansion. You can find the full programme on Krogerus Transaction Forum's website. The event was hosted by Managing Partner Mårten Knuts, Partners Marcus Möller (Head of M&A) and Johan Aalto, as well as other Krogerus’ experts.

Data suggests that we are at the beginning of a new economic cycle

The first session of the forum: A new beginning of the economic cycle started with an overview by Luca Ferrari on international M&A trends.

Luca Ferrari presented a convincing set of data indicating that we are heading towards a new beginning of the economic cycle. "When looking at global M&A volumes over the past 30 years, you may notice that M&A is an inherently cyclical business, with a classic cycle of four to five years of steady increase in M&A volumes followed by a couple years of decreasing volumes. After the financial crisis, there has been an unusually long period of quantitative easing without a regular cycle. However, there are signs of 2024 being the beginning of the upside of a new economic cycle", says Luca Ferrari.

To support this statement, Luca Ferrari presented, for example, the following datapoints:

• Global M&A volumes have increased 18% in 2024 compared to the previous year.
• Current levels of US unemployment are among the lowest we have seen in a long time.
• Inflation is trending to normalised levels and GDP is growing.
• Consumer spending is stabilising according to credit card usage.
• Capital markets are also increasingly supportive of this view: major stock market indexes closed reaching all-time highs in September 2024, the financing market is rebounding, market volatility remains subdued, and borrowing costs are now stable.

The data is pointing into the right direction; macroeconomic KPI's are stabilising, and there is a large amount of equity capital waiting to be deployed. However, there are still some headwinds that slow down M&A activity, for example, geopolitical uncertainty, a tail risk of economic recession and an increasingly complex regulatory environment. Altogether, the scales are still tipping to the positive side, indicating that we are at the beginning of a new economic cycle. "On the strategic M&A side, what I find most supportive of M&A activity right now is the confidence levels that I'm seeing in board rooms and management teams", summarises Luca Ferrari.

Technology continues to make Finland an interesting investment opportunity

The session continued with a reflection board focusing on the current economic climate, moderated by our Managing Partner Mårten Knuts. The board included Luca Ferrari and Elizabeth Crain, Co-Founder and former Chief Operating Officer of Moelis & Company and Member of the Board of Directors of Nokia Corporation.

Elizabeth Crain also mostly shared Luca Ferrari's views on the outlook for the transaction market. "Corporates are using M&A as a critical tool to facilitate and accelerate strategy across all sectors. This trend has not changed, and it will continue to drive corporate M&A forward. While there is definitely an appetite to transact, there are still some tensions that have slowed down M&A activity. Private equity is in some respect the missing piece in a more robust M&A recovery", says Elizabeth Crain.

Both panellists concur, that technology continues to be an important driver of M&A. There are many management teams and boards who want to be at the forefront of opportunities and technological advancements in their sector. Countries that are particularly successful with technology and technology-driven transactions are the ones that have an infrastructure that allows people to pursue technological advancements in a reasonably funded way, that has the right risk to reward ratio. According to Luca Ferrari, Finland is one of these countries. "Finland has a more balanced social and economic framework, together with an education framework that makes a good base for technological advancements. This is an incredible asset that Finland should be proud of", says Luca Ferrari.

"Finland's leadership in education, innovation, and a stable and transparent business environment are a few of the things companies consider when looking for opportunities to transact. Lately Finland has also attracted attention due to the "Nordic digital infrastructure" that has gained corporates' interest in terms of connectivity and opportunities to expand, which could be really compelling going forward", says Elizabeth Crain.

Confidence is a key theme in boosting M&A activity in Finland

The overarching theme of the day was confidence: Finland has a lot to be proud of and many factors that make us a good transaction option. However, many of the speakers called out for more confidence – we need more confidence to transact, to take our companies international, take risks and think big already at the beginning of our companies' journeys. Confidence creates a growth mindset and a positive circle, where M&A transactions generate more M&A. Targeted acquisitions can also boost development and innovation and create a faster way to reach objectives than organic growth.

"We at Krogerus want to be deeply engaged in economic revitalization and in helping Finnish companies expand abroad as well as attract more international capital and talent to Finland", concludes Mårten Knuts.

We are already looking forward to organising Krogerus Transactions Forum 2025, which we will release more information on later. See you next year!

 

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