Annual report

US and Asian senior executives give their insights into investment appetite and risks in Europe

At 36Brains, we’re not just observers; we’re architects of risk mitigation. We are proud to unveil the latest Risky business report prepared in collaboration with Ion Analytics. This year, we shift our focus to delve into the perspectives of US and Asian investors on European deals. In a world marked by geopolitical unrest, this report explores the changing landscape of cross-border M&A and its implications. Our latest findings illuminate a landscape reshaped by geopolitical dynamics. A staggering 83% of respondents believe that the ongoing tensions between the US and China, coupled with the war in Ukraine (55%), will make Europe more appealing for investments in the next 12 months. In assessing risk, France stands out as the least risky European market (42%), while Italy and Spain & Portugal share similar perceptions of low risk, each cited by 33% of respondents.

Our key findings include:

• Divergent strategies in the East and West: What priorities guide US and Asian dealmakers for the next 12 months? For US respondents, a notable 37% place a strong emphasis on business synergies, hinting at a focus on value creation through cohesive integration. Conversely, their Asian counterparts exhibit a different inclination, with an equally prominent 37% directing their efforts towards restructuring and distressed opportunities, raising questions about their strategy in underperforming assets.
• Escalating scrutiny of ESG factors: In an era where sustainability and responsible investing are taking centre stage, we delve into the pressing question of how investors approach ESG issues in M&A? The findings reveal a profound shift, with a remarkable 60% of respondents reporting increased due diligence regarding sustainability/ESG factors in European deals over the past year. What is driving this heightened focus? Notably, one-fifth of respondents have even taken the drastic step of abandoning a deal due to inadequate assessments of a target company’s environmental practices.
• The role of advisors in mitigating risk: Amid the intricate landscape of European M&A, the role of advisors emerges as a central theme. What motivates international dealmakers to engage third-party advisers in Europe? Our research provides compelling answers, highlighting two key factors: improving risk management and addressing the costliness of expanding in-house capabilities and technologies, each cited by 22% of respondents. But what attributes are they seeking in advisors? Expert local market knowledge (25%), delivering services with speed and precision (20%), and offering good value for money (20%).