At the M&A Trend Forum on February 27, a panel of top experts discussed the opportunities for Belgian M&A and private equity in 2025 and beyond.
Check out the pictures of the M&A Trend Forum here...
The M&A Trend Forum on 27 February, an event sponsored by Ansarada, was an unforgettable evening. Because of the beautiful location, namely the Telenet headquarters in Mechelen. Because the room was packed, the entire M&A community was clearly looking forward to it. And because of the unique insights our members gained into the trends our panel members see for 2025 and beyond. Stating that the M&A landscape and the whole world are in flux is a colossal understatement…
Expectations were high when the members of our M&A Community flocked to the M&A Trend Forum. However, to see what the future holds for M&A, you need a crystal ball... or an oracle. So we put together ‘the closest thing to an M&A oracle’, with four true M&A experts: David Theys, managing director of Houlihan Lokey, Peter Zwijnenburg, managing director of Aon, Lieve Creten, co-founder of the Belgian M&A practice at Deloitte, and John Porter, CEO of Telenet and host of the evening. How will M&A and private equity (PE) evolve in 2025 and beyond?
Worldwide: uncertainty, but also optimism
After a warm welcome by M&A Community Manager Charlotte Declercq, the debate started at the macro level. Moderator Melle Eijckelhoff of the M&A Community Belgium asked the panel members which macro factors will have which impact. “Interest rates will continue to have a major influence on M&A activity in 2025, regardless of whether they rise or fall”, explained David Theys, who primarily views M&A from a PE perspective. “If interest rates fall, as is currently the case, valuations should normally increase. But today that is only theory given the geopolitical chaos. There is a lot of uncertainty, including among many of our own clients: should they sell their company or just wait?”
“What will also play a role, especially in Europe”, Lieve Creten added, “is the energy transition. As well as the war for talent, the ageing population and digitization in many sectors. In the longer term, all these trends will undoubtedly spur M&A activity. I'm just not sure if they will do so in the short term, because with M&A you want to have a good view of the future performance of the company you want to buy. All these factors make it more difficult to predict, which means that M&A processes take longer.”
“I believe you can close good deals in any market”, John Porter remarked. “The best investment I ever made was with capital I had borrowed at an interest rate of 14 percent. When interest rates and volatility are high, stress increases in certain markets, which in turn accelerates the deal flow. Investors are also once again more interested in alternative investments.”
“Let me add something optimistic to that”, Peter Zwijnenburg continued. “I expect corporates to be even more active in M&A than last year, given that they have a lot of liquidity available. And the events in the United States? Although you can criticize it, it could turn out positively for M&A. For American investors, valuations in Europe are low. Conversely, as a European company you have to have a branch in the US to pay the levies there. So European companies may invest more in the US, and vice versa.”
The expert panel with (from left to right): Lieve Creten, David Theys, Peter Zwijnenburg and John Porter
Belgium: increasing PE interest, but a slowdown
Will private equity in Belgium react to all these factors in the same way as in neighboring countries, or will it be different? “Different markets have different dynamics”, Peter Zwijnenburg continued. “The Dutch private equity market, for example, is much more active than the Belgian market, which has to do with the penetration of private equity: in the Netherlands, more companies are in private equity hands.”
“Furthermore, Belgium is a typical mid-market with many family businesses”, Lieve Creten added. “These are companies that are certainly for sale, but sometimes there is a mismatch between the desired sales and purchase price. As a result, many deals do not go through, while many family businesses do not feel the need to sell quickly. PE interest in the Belgian market is increasing because there are also good deals to be had. In short, we are seeing the same PE and M&A trends as abroad, but as always with some delay and with less extreme highs and lows.”
How is private equity evolving in general?
“If I were to give 2024 a seven out of ten, I would dare to award 2025 a seven and a half or maybe even an eight out of ten. It will be a transition year to better times”, explained David Theys. “In the years that follow, from 2026 to 2028, many private equity funds will have to sell, but not always for the right reasons. PE funds usually have a closed end, in which they invest for a maximum of twelve years. So yes, there will be more M&A activity anyway, but because it is necessary from a technical point of view. Not necessarily because the right moment has arrived.”
Lieve Creten: “Large PE funds also respond to this by setting up continuation funds. You see them popping up everywhere. They bring in assets that they bought at a high price and should now be able to sell at a lower price. They will then re-evaluate these assets within three to five years.”
Private equity funds are estimated to have more than 400 billion dollars in dry powder that has yet to be allocated to targets. So where will they invest? Where is the untapped potential? “In everything related to B2B services, such as accountancy, legal firms, patents and IT regulation”, David Theys responded. “These are sectors that are currently completely fragmented. You will see a lot of consolidation in these sectors. Profit can then come from multiple arbitrage, but this is less the case than it once was. As a PE investor, you should not just buy, hold and sell companies, but think carefully about which companies and add-ons you buy and how you integrate them into a strong corporate.”
Specialization is becoming a must
Furthermore, PE funds must specialize, David Theys noted. “Funds that do not make clear what they stand for, or that do not prove they can build companies, often find it difficult to raise new capital and then close their doors. Managing from a spreadsheet is no longer an option.” Lieve Creten emphasized that private equity is a very resilient asset class. “Many funds adapt quickly, have a great deal of expertise and focus on talent, innovation and operational success.”
That is also the way in which listed and multinational companies expand and create value, John Porter continued. “Allocating capital correctly, according to different strategies depending on the jurisdiction of the market, reaping the benefits of synergies, and conversely removing capital from sectors that do not yield growth.”
One corporate has that discipline, another does not, Peter Zwijnenburg observed. “That is why I am convinced that you will see more and more activist shareholders who consciously choose companies that are working on non-core divestments... and stay away from others. That could even lead to delistings.”
High time for a truly unified European market!
Finally, we return to the geopolitical world stage. “Now that there is a madman in power in America”, John Porter stated bluntly, “I see an opportunity for Europe to become a true single market in the coming years. Too many sectors are too fragmented and restricted by national borders, while they should be able to scale up across all borders. Like the telecom sector. We must consolidate internationally in order to be able to continue transforming technologically and to continue attracting enough capital. Investors simply prefer to invest in sectors that can scale up. National borders don't interest them at all.”
And? Have the expectations been met?
The panel discussion is over, but the conversation among those present continues over drinks and snacks. The general feeling among the M&A experts present? Many feel strengthened in their convictions about what the future holds. They receive concrete confirmation of what they already sensed. And the idea of a strong Europe? That is definitely catching on.
Photography: Vincent Gorissen
