Market Eye: Our snapshot of the M&A backdrop

It seems we are, slowly but surely, starting to turn the corner in M&A activity. By the end of 2023, global M&A volumes had been declining for two years since 2021’s exceptional peak. M&A in Q1 of 2024 experienced the strongest start in two years, with over $549bn in global deal volumes, marking a 28% increase from Q1 of 2023, and together with declining rates of inflation and hopes that the resulting rate cuts will start to come through, there are reasons for optimism for what H2 of 2024 might bring.

 Economics and backdrop

The tides of change are also being felt across the globe in this widespread election year. Roughly 49% of the earth’s population (some 4.2 billion people across 64 countries) have already been through, or are set to go through, national elections at some point this year. The new government in the UK, the increase in the representation of the far right in France and Modi’s surprise failure to obtain an outright majority in India reflect a broader desire for change and the geopolitical shifts setting in across the world. We are yet to see what policies these new governments will prioritize, and whether changes such as those in France and India will result in more populist measures being adopted, rather than measures, which focus on the enhancement of macroeconomic stability and economic growth. These unknowns, plus the effects of the elections, which are yet to take place (notably in the USA) are still to be fully priced in, resulting in some business leaders adopting a “wait and see” approach before considering further M&A activity. Overall, however, companies welcome the relative stability that new governments bring as new policies are outlined and implemented.

Despite reasons for positivity, potential risks continue to weigh on recovery levels. Activity levels among PE buyers continue to lag strategics, depressed by high borrowing costs. This could change quickly with a reduction in interest rates, and we remain hopeful that interest rates will reduce steadily over the remainder of 2024, provided inflation continues to drop in the coming months. In support of this belief, although the Fed continues to hold rates steady at 5.5%, a majority of Fed officials still back at least one rate cut this year.

Regional instability in the Middle East and Ukraine, along with geopolitical shifts as a result of the ongoing national elections, continue to impact investor confidence and global supply chains, which in turn affects company revenue and cools appetite for M&A. As new governments start to implement their economic and foreign policy plans, we anticipate deal makers will again have the confidence to pursue new opportunities, provided the valuation gap between sellers and buyers narrows.

M&A landscape

The valuation gap remains one of the key deal issues to be settled on transactions. In line with what we had seen towards the end of 2023, deal multiples have continued to stabalize, reflecting greater confidence. As regards the public M&A landscape, trading multiples and valuations have risen, with Q1 of 2024 showing a healthy uptick in public M&A activity in the UK. We anticipate the stronger performance in public M&A markets will reinforce a broader M&A recovery, as it creates opportunities for would-be sellers and investors sitting on large amounts of “dry powder”.

The increased scrutiny by and enhanced powers of anti-trust and foreign direct investment regulators, particularly in the US, UK and Europe, will continue to be a key consideration for potential transactions. We are seeing a number of potential acquirers opt for enhanced regulatory assessments prior to approaches, extending the potential transaction timeline. Conversely, once approaches are made, we have noticed a slight reduction in the length of time that due diligence processes are taking (possibly as a result of the more extensive pre-approach diligence being undertaken).

While boards wait for the geopolitical landscape to settle and for interest rates to decrease, carve-outs remain a popular route to growth. We have seen a significant increase in businesses divesting themselves of non-core assets amid continuing uncertainties, enabling them to realize cash and reduce leverage in the face of high refinancing costs. A number of our clients are undertaking reorganizations in preparation for future divestiture, even if they are not yet implementing all the sale plans.

Despite the ongoing potential headwinds, for those companies that can weather the macroeconomic uncertainties and navigate the changing geopolitical landscape, we foresee a healthy pipeline of M&A opportunities and therefore a stronger finish to 2024. We might also see an end to the “no process, process” which we have seen being employed – a soft launch of auction processes, which have not been fully prepped for sale but have the objective of testing the market. Auction processes are beginning to make a comeback, particularly for best in class assets.

These heightened multiples reflect a global increase in deal values, with a particular uptick in larger capital deals (deals larger than $10bn) in Q1 of 2024 – the highest number of larger capital deals since Q2 of 2022. In particular, the tech, industrials and healthcare sectors have continued to command strong valuations since the pandemic. Such larger capital deals naturally attract the headlines, instilling confidence in boards when it comes to M&A opportunities.

There remains a slightly depressed M&A backdrop in the sector resulting from a number of challenges such as regulatory pressures, health concerns and changing consumer attitudes. However, for businesses that can pivot to take advantages of these trends there are opportunities for growth and to take advantage of changing tastes, such as low/no alcohol beverages. M&A activity is showing some resilience with certain players consolidating quality assets in these evolving markets.

Commodity prices are easing but food manufacturing businesses (except those developing food products in the well-being/life science sector) remain hit by a higher cost base and wage inflation. For this reason we are seeing more corporate reorganizations and simplification exercises rather than pure M&A activity. Those industry players with a strong balance sheet can take advantage of opportunities which make up the majority of the activity we are seeing.

Sub-sectors, such as the luxury sector, are still faring better and luxury businesses are getting high valuations if products are seen to be less price sensitive. However, the sub-sector is not immune to global pressures, the Chinese economy is perceived to be slowing down but India has a rising middle class. Those companies that are able to target consumers with higher disposable incomes will have an advantage and M&A can provide an effective strategy for this. It is to be noted that well-being products (where some key players in the food industry are investing) continue to reach relatively high valuations.

There is evidence that PE interest has waned and there is a reliance on strategics as acquirers in the sector.

Specific sub-sector trends that are noteworthy:

Hospitality and leisure

A number of travel businesses are getting ready to come to market in 2024 as revenues return and there is evidence of improved performance to underpin valuations.

There remain challenges for M&A as the cost of living pressures remain volatile in a number of jurisdictions. The Middle East continues to invest in the sub-sector as a number of nations see tourism as a way to diversify income.

Food and beverage

There remain challenges in the sub-sector but certain territories, in Europe for example, are seeing prices ease which is enabling businesses to focus on their acquisition strategy and not just operational issues.

Multinationals find themselves having to navigate a number of sanctions regimes. This continues to lead to disposal activity as companies look to exit from certain markets to reduce their risk of exposure to breaching sanctions obligations.

Larger corporates, and particularly, consumer facing brands, also continue to find themselves under scrutiny as key stakeholders expect strong ESG credentials. It may be that some of this demand requires companies to look to ESG focused acquisitions to bring the relevant expertise in-house.

Regulatory burden continues to affect businesses in the sub-sector. However, a number of our clients are now looking to stimulate innovation and the pace of technology change with AI means big brands can leverage their relationship with consumers to generate new projects.

Key players in the food industry continue to make acquisitions in the health science/well-being sub-sector where assets can reach high valuations

Retail

The retail sub-sector is still struggling with a number of volatile cost areas. At the same time demand is lessening due to lower levels of disposable income impacting spend on discretionary items. M&A activity in the sub-sector tends to be driven by distressed scenarios as boards continue to grapple with the key strategic decisions and the blend of online presence and physical stores.

The exception to this is the luxury industry which is still growing and where we see a consolidation of the market. Localization of the stores of the luxury brands is key and certain areas in cities reach very high prices per square meters.

Fast fashion is under increasing scrutiny and we are seeing clients looking to invest in assets with a better ESG profile. We are seeing a resurgence in the department store type model via online offerings. A number of retailers in strong positions have been acquiring brands to promote growth via their own online platforms.

The UK election has recently concluded and energy, and particularly clean energy, was at the forefront of debate between the parties. Labour positioned themselves as the most forward leaning party in the energy debate and one of their core commitments is the creation of GB Energy. GB Energy will be a publicly-owned clean power company, with a proposed current capital investment expected to be £8.3bn over the next parliament. Decarbonization  projects are expected to be the priority and this investment will inevitably drive M&A in the clean energy space throughout a project lifecycle. 

Energy transition and de-carbonization  is critical for all of our clients and is driving energy related M&A activity. Corporates are continuing to think of how to decarbonize their businesses with no easy solution for many. A Labour government has traditionally preferred certain energy sources over others and we expect to see greater support for onshore and offshore wind, and solar. it will be interesting to see if in the UK there will be support for new technologies such as hydrogen, carbon capture and storage (CCS), small modular reactors (SMRs) or long duration energy storage such as hydro and larger batteries.  

Globally M&A continues to be very busy. Funds are becoming more active and looking at buying more than single sites and single companies, instead opting for the strategy of acquiring a suitable platform that will allow them to deploy capital on multiple assets or types of assets.  This is seen as the better strategy for future growth and hedging through diversification as the energy transition and market reforms progress at rapid pace. Fundraising has been more challenging in the last 6-12 months, however a number of funds are coming towards their end of life, with those funds looking to exit whilst other investors are needing to deploy their cash from earlier fundraising. An issue affecting the sector and which is still a drag on M&A activity is raising, and the cost of, debt. 

In a number of jurisdictions there needs to be an effective legal framework and plan to put capital work. In most jurisdictions there have been grid connection issues and aging or congested grid infrastructure delaying projects. Removing these barriers is a priority in GB and elsewhere. Public grid operators and regulators are working on reforms to ensure that so-called “zombie projects” are not blocking capacity in the queue and more viable projects are prioritized on a more ‘first-ready, first served’ basis.

Energy infrastructure will always be a complex and highly regulated sector, but with the energy transition and net zero targets, much needed significant reforms are ongoing which creates both opportunities and risk.  The subsidies landscape is likely to remain reasonably settled in the UK and major European countries, especially for ‘conventional’ renewables like wind and solar. But new/improved subsidies or support schemes/policies can be expected to come through, at varying pace, for other energy transition technologies such as new nuclear, long duration energy storage (LDES), hydrogen, and biofuels (including sustainable aviation fuel (SAF) and sustainable marine fuel), each of which will be important parts of the energy transition where significant investment is needed, at a scale and pace.

Developers and owners of energy projects need to have eyes on the evolving regulatory landscape, and subsidies/support schemes, but also increasingly the demands of corporate buyers of power who are underwriting clean energy projects through long-term corporate power purchase agreements (PPAs). Many corporate buyers are now very energy savvy and consistently driving best practice e.g. in terms of ESG requirements they expect of their suppliers.

Specific sub-sector trends that are noteworthy:

Clean

There has been significant growth in off-shore wind and regulatory changes have provided opportunities in this area. However the last round of off-shore wind contracts was not taken up as the prices were too low. 

Increasingly, entrepreneurial developers (and their funders) are looking at re-powering end of life assets with new or advanced technology.  With some of the capital expenditure already embedded in the model, we see the opportunities across Europe being substantial.

We see a continuing uptick in solar development, especially hybridized models with battery energy storage systems (BESS).  This sector continues to outperform all forecasts and there remain ambitious growth plans of incumbents and new entrants.  We have seen solar and wind still as a preferred energy source for major corporates looking to invest in their own energy creation. Such investment has good ESG credentials and is therefore seen as attractive on a number of levels.

Battery projects have been facing tough times and we see depressed M&A activity relating to these assets as a number of participants focus on the assets that they have and optimizing those or shoring up revenues, and less aggressively looking at new assets.  However, developers and funds still have pipelines to deploy and long term ambitions to fulfil including large-scale batteries, so there is still some activity. The current market has created a strong desire for revenue certainty, which can be achieved by those with the right knowledge and approach. Batteries are at last being recognized in the UK and some other markets as helping the grid constraint problems, which will hopefully lead to more positive outcomes and faster, less risky deployment.

Infrastructure

M&A transactions are becoming larger, there is trading of portfolio assets and a general trend of larger and larger projects will continue.  The opportunities here for large scale deployment of capital both at a generation and grid stability level should not be under-estimated. We expect greater focus on portfolio optimization as shown by ongoing reinvestment of capital in key strategic priorities.

Change of political regimes mean some people are thinking about how to manage sale mandates. Recent and upcoming elections in certain geographies around the world in 2024 are leading to investors analyzing whether potential new governments will have ‘infrastructure heavy’ spending requirements.  Our view is that in a world where energy security and decarbonization is still required, and where there is a significant requirement for new energy projects and energy infrastructure, successful governments will need to create the environment for this private capital to be spent.  Their challenge will be balancing this with the cost to consumers.

Deal activity in this sector is steadily increasing as we progress through 2024 with market valuations now stabilizing. Regulatory change is still a big driver in the sector and is causing the lifecycle of deals to become more protracted (particularly when it comes to scrutiny around change of control matters) albeit not unusually so compared to years prior. The market continues to be steered by buyers, except where there is a grade ‘A’ asset involved; the appetite for which is certainly on the rise.

In terms of deal value, although 2023 saw a decline in the number of high value deals being undertaken, this has tracked across other sectors too and, in fact, the drop in M&A volume generally during Q4 of 2023 was not as significant in this sector as in others suggesting a preference by our Financial Services sector clients to do smaller deals (specifically in the UK). Relatedly, there has been in uptick in credible insurance companies taking opportunities to grow by acquisition. A lot of Financial Services legacy institutions and established FinTechs are now looking to diversify and expand their own offering; they are waking up to the fact that the best way to do so quickly is inorganically by deploying their cash to buy smaller FinTechs that are themselves facing a challenging funding landscape as an alternative to investment. 

Corporate investors have been active in the insure-tech space and money is being put to work at an earlier stage (for example, niche platforms are now becoming quite buoyant).
Corporate VC investors are also demonstrating a certain resilience as Financial Services organizations continue to bring disruptive business models into their organization or partner up with those that do so.

The Financial Services market is improving as the macroenvironment stabilizes and interest rates return to more normalized levels.

Trends around ongoing digitization, including the emergence of new technologies (for example, blockchain, Gen AI, quantum), and continued regulatory changes, are pressuring FinTechs to evolve and point towards hopes for a more active M&A market in the second half of 2024 and beyond.

Specific sub-sector trends that are noteworthy:

Banking

Challenger banks continue to remain confident in M&A matters and US investors, in particular, are looking to Europe as a place to consolidate given the strength of its economy compared to some EU member states.

Asset and fund management

Asset management, wealth and insurance are remaining strong. We are continuing to see acquisitions of alternative assets as a key trend.

Insurance

Insurance broking in the non-life space remains consistent and busy. This sub-sector saw the largest PE deal in the UK so far this year. There continues to be a lot of corporate activity around life insurance and we expect this to continue.

Crypto assets

Although this sub-sector has been through a difficult time over the last few years, crypto and crypto assets are now becoming a more mature part of the Financial Services eco-system and so those who are involved in the more enterprise-grade type of propositions will see more activity and consolidation in this space moving forwards.

The drivers for M&A in the Healthcare sector remain incredibly strong. Healthcare systems remain under pressure having experienced extreme stress throughout the pandemic and beyond. Coupled with growing demand for healthcare (both public and private), the ability or capacity of health systems to deliver through traditional care models is challenged and the industry is looking at new innovation to adapt to delivering more personalized care.

In Life Sciences, M&A and licensing activity continue to form a strategic driver of growth and change.  In 2023, Life Sciences M&A spending rose to over $190 billion, up 34% from 2022, and generally market activity was perceived to have bounced back to pre-pandemic levels (setting aside the high of 2021). Certain sub-sectors within Life Sciences stand out as having been primary drivers of activity, with pharma services, biopharma, medical devices and medtech assets delivering strong transactional activity.

Technology is helping drive change across the sector in a number of different ways, including through the adoption of different care models and in the use of AI in accelerated drug development and delivery.  Remote patient monitoring and other technologies have contributed to an unheralded wealth of data available for research and development and this, combined with advanced data analysis solutions (often AI driven), is giving rise to an acceleration of new technologies coming to market.  At least in part as a result of this, but no doubt also attributable to the well-publicized and increasingly looming ‘patent cliff’ and a rebalancing of valuations more generally across the market, venture capital investment in Life Sciences has been particularly notable and we expect will continue to be so.  Perhaps partly as a result of this, there has been a steady rise of down-round financings, in particular in healthcare, suggesting a re-alignment between buyer and seller expectations is beginning to fall in to place.

Health and Life Sciences businesses are heavily impacted by changes in government policies and tightening regulations, so a year marked by global elections and increasing nationalist policy making creates a degree of look-forward uncertainty.  Increased regulatory scrutiny of deals by way of antitrust and foreign direct investment legislation continues to be very relevant for the sector and indeed several national regimes have healthcare and/or biotechnology-related transactions within their ‘mandatory filing’ regimes.  
Specific sub-sector trends that are noteworthy:

Pharma

As drug substances become increasingly complex, more rapid innovation and production is needed to bring solutions to market faster, and keeping expenses in check, or even reducing costs, is top of mind for many pharmaceutical companies. Contract development and manufacturing organizations (CDMO) or contract manufacturing organizations (CMO) will remain attractive from an M&A perspective as their services are used to help pharmaceutical companies bring new products or formulas to market more quickly without investing in additional infrastructure to support it. In addition, the potential for AI to transform drug development and discovery will continue to drive and attract significant funding from big pharma businesses.

Bio-Tech

High levels of activity in Bio-Tech continue and we anticipate will continue for the foreseeable future as the continuous stream of technological advances (in part again fuelled by AI) and scientific breakthroughs shows no sign of slowdown. Bio-Tech valuations have also rebalanced to an extent, having come down from extreme highs, making assets more attractive for acquisition. These factors, combined with the general need on behalf of Bio-Tech businesses to raise funds and get ahead of the patent cliff, should fuel activity in 2024.

Healthcare services

M&A is being driven and activity will continue to increase as a result of the development of new healthcare systems/models and the consumerization of healthcare services. In particular we have been seeing this for some time in private clinics, vets and dentistry. These areas remain quite fragmented and are likely to see consolidation, albeit are attracting increased antitrust scrutiny in certain jurisdictions with the UK CMA calling in various dental transactions in the last 12-18 months as well as commencing a market investigation in the veterinary market, the output of which is awaited.

Life sciences

There are more strategic development agreements, licensing arrangements and joint ventures being considered by Life Sciences businesses as a way of pooling resource and sharing risk. They are effective tools in boosting R&D activity without companies potentially shouldering the sole cost on their balance sheet.  There has also been a steady but increasing rise in carve-outs and spin-offs in the sub-sector, with the likes of GE Healthcare, Johnson & Johnson, Danaher, GSK/Pfizer and others all recently undertaking significant spin-offs.  These transactions show no sign of slowing down as Life Sciences businesses continue their strategic focus on their core offerings, which also as a by-product creates additional opportunities and incentives for pharma services businesses.

The sector is still being impacted by high interest rates, debt issues and the continuing increase in financing costs. Wages are proving a difficult tight rope to walk; key talent is essential to retain but inflationary pressures are already squeezing margins/earnings, and something will have to give. Energy price inflation has been easing which has been welcome relief. All of this means that major corporates have to be strategic with their M&A to allocate capital to maximize returns. We are seeing a number of clients evaluate non-core assets and prepare them for sale in the future with corporate reorganizations on the increase. 

The Inflation Reduction Act is encouraging the US to be more domestically focused, which we think has been weighing down on deals. This is also an approach that other countries have been considering as there is domestic political capital to be gained in being seen to re-patriate manufacturing capability. As with many sectors it is an interesting year with elections, economy and interest rates in the US but industrials clients are particularly affected by tariffs and the geopolitical uncertainty between the US, China and the EU. 

We predict that over the next 6 months a number of industrials companies will have completed restructurings or are otherwise cash rich and will turn to growing by acquisition. This will give confidence to do deals which we have been experiencing in the last quarter. 
Private capital has been quieter so the corporate acquirers have been in the driving seat in a number of auctions. However, we expect private capital to make a return in the second half of this year and there will be more competition for assets. Closing a deal will remain more of a challenge due to regulatory requirements that are more prevalent in all jurisdictions. 
The US has been the best performer of the G7 economies and outside of this weaker equities and depressed multiples have constrained what companies are able to pay for assets. Shareholder activism is a discussion topic for many M&A participants but given the almost unprecedent convergence of negative macro conditions there has not been a unform disgruntlement. Some shareholders have therefore given some leeway but this cannot continue as they will be under their own pressure to for returns on capital invested and this will force discussed with Boards about increasing returns, with M&A certain to be on the agenda. 

Specific sub-sector trends that are noteworthy:

Automotive

ESG initiatives remain a focus as the net zero pledges of governments around the world are heavily dependent on the carbon emissions driven by the industry. This is tempered by some politicians facing pressure from voters to find solutions that do not fall directly on household incomes. Electrification, autonomous driving and connected vehicle technology, as themes, will continue to be the driving factors as participants need to develop the capability and skills required. 

Difficult choices lie ahead for policymakers between allowing globalization to drive down the prices of electric cars or to protect national heritage brands. For the historically dominant manufacturers, such as those in western Europe, M&A certainly offers an opportunity to acquire new technology and allow them to remain ahead of potentially cheaper imports. 
OEMs will need to improve their customer experience performance and dealers will need to ensure an agency model can sit alongside their more traditional business. Direct to consumer marketing in the automotive sub-sector will remain a key theme, and likely heat-up in 2024.

Luxury car sales will continue to drive profitability throughout the supply chain and premium sales will be key to margins.

Aerospace, defense and security

R&D spend continues to be challenging for a number of companies due to lead times and the cost of capital and so they are looking to joint ventures/strategic collaborations. We see this as a continuing theme which companies employ as an alternative to product development.

The geopolitical landscape means that defense spending is a priority which should drive activity as companies look to increase capability and find a technological edge. Regulatory scrutiny will continue to impact the sub-sector and that will not change in the foreseeable future.

Chemicals

As with many in the industrials space, it is a very energy intensive industry many participants are prioritizing cost optimization to protect margins. This will lead to reviews of non-core assets and rationalizations which is seen in a number of other sub-sectors and we predict will drive M&A.

Building products

Deal activity is likely to remain slow as the sub-sector is particularly impacted by interest rates which are slowly decreasing but not to a level that are reflected in valuations. The level of infrastructure projects is slowing in some western nations and the number of elections this year means there is risk of a change in policy. Government infrastructure projects create deal flow and certainty is needed as to deliverability and cost.

Regulatory reform in jurisdictions can jolt participants and impact on M&A processes. In the UK potential reform around planning regulations and a drive for housebuilding could spark activity in the sub-sector.

We see a return to a more robustly functioning M&A market in the second half of 2024. The tech sector has not been immune in market downturn, albeit the sector remains the most active with a flight to quality assets showing the largest multiples across our core sectors. It has, however, still been impacted by the reduced number of exits from technology investments which means there is not as much capital available for recycling. 

There is still money available to be put to work in both financial investors and the major technology companies that is awaiting a return of confidence to allow it to be unlocked, with many market participants foreseeing an increase of activity in H2 2024. 

Generative AI has been the most active vertical for VC investment activity and will become a more important vertical for M&A activity as it matures. AI also highlights the impact of regulations on the technology sector, it continues to be a topic of conversation as regulators grapple with the societal impact of rapidly advancing technology. The EU’s AI Act is coming into force next year which could have an impact on M&A activity but it is well trailed so we do not anticipate it being a particular catalyst or drag. The more interesting point will be how regulators respond to it once the act is in force.

National security regimes are more stringent and the ease with which technology crosses borders means that it is a more challenging regulatory environment, especially when the general trend of regulators seem to be a more interventionist approach. The reduction in activity at a macro level means deals are still taking longer and traditional earn out structures are being employed to bridge to valuations.  

We do see a number of sub-sectors where there is a high level of consolidation and these are continuing to drive M&A activity, for example IT managed services continued to attract a high concentration of private capital investment. 

Specific sub-sector trends that are noteworthy:

Technology

The larger corporates have still been busy and major global players in the industry have been investing heavily in new technology. Competition authorities are undoubtedly looking with interest at new industries which includes AI. This means that M&A activity in the sub-sector needs to factor in the increased assertiveness of many authorities. Whilst it can be a challenge, our clients and many participants see it as a risk worth taking. 

Large technology companies are still looking for good assets of modest size with the strategy of adding valuable capabilities that will improve their core business. Corporate venturing continues to be active, acting as a way for some corporates to deploy capital and potentially not have to consolidate riskier ventures into their balance sheet.
The intrinsic geopolitical value of technologies will continue to drive M&A with strategic technologies, such as semiconductors, expected to generate a lot of M&A activity.

Digital infrastructure

Digital infrastructure is an M&A hotspot for corporates and funds. We are seeing an increasing trend of investors showing interest in connected products and assets covering not just data centers, but also the connectivity and power.

The increasing demands of AI will only place additional pressure on infrastructure which will require substantive investment. Some of the largest corporates (particularly with edge computing requirements) are thinking of coming out of consortiums and building the relevant infrastructure themselves due the requirement of this fast growing technology.

In Europe, regulators have said they are open to consolidation of the terrestrial fiber networks. In 2024 we are starting to see a lot more consolidation as a result of this as participants look to establish more pan-European networks.

There are a number of underperforming assets but infrastructure funds remain active in the space. Interest rates do steadily decline and this can only help M&A activity as debt becomes more accessible.

Media

A bright spot in the sub-sector is video gaming which we anticipate will remain active. There is demand for platforms to be integrated and we anticipate that investment in new titles will continue to be ready to benefit when there is an uptick in consumer spending. 

Gaming looks set to continue to grow and be attractive for corporates and funds. Virtual reality hardware prices are dropping and making them more affordable to the consumer. Developers will be looking to leverage off this and landing a big title will make any modest sized players an attractive acquisition target.

This sub-sector is experiencing the most significant growth within the broader media and entertainment space.