Kuif Klein Wassink and Ico Jalink, M&A Partners at Dentons, express deep concerns about political divisions and regulatory uncertainty. “Uncertainty due to political divisions and unclear policies is increasing”, they state, noting that this has led to stricter Foreign Direct Investment (FDI) regulations in various countries.

Marc Habermehl, Partner at Stibbe, agrees: “I would point to the European M&A climate in general, but specifically in the Netherlands. The uncertainty surrounding government policy could have a significant impact on long-term investments. We’ve been hearing this for a few years now. It's becoming more common for parties to look for ways out of the Dutch market due to unclear government policy, especially regarding fiscal and regulatory matters. Businesses need to know that the investments they make today will still hold value in the coming years. In the Netherlands, changing policies could risk undermining those investments. In other countries, like the U.S., there's a consistently business-friendly climate, regardless of political leadership. Companies are increasingly turning to the U.S. because they know they’ll be welcomed and can operate with more certainty.”

Marcel Vlaar, Partner at RSM Netherlands, puts national politics at the top of the list of challenges, criticizing the government for reversing commitments made to industries like agriculture and electrification. He states: “I find it incomprehensible what is happening under this cabinet. Everything is reversed after previous investments. Think of agriculture and electrification. And consider the planned higher VAT on books, newspapers and sports activities. Not only incomprehensible, but also unbelievable.”

Jan-Hendrik Horsmeier from Clifford Chance highlights the detrimental effect of political shifts on industries, such as the solar panel sector, which has been impacted by changing regulations.

The ongoing conflict between Russia and Ukraine remains a significant concern for dealmakers. Philippe Craninx, Managing Partner at Moore Corporate Finance, identifies this war as a major risk factor.

“If the conflict escalates, particularly with the potential for nuclear weapons, the situation could drastically change”, warns Marco Gulpers, Head of Corporate Finance M&A Netherlands at ING. He stresses that geopolitical developments can adversely affect the European M&A climate, especially when financing large transactions.

Hans Swinnen, Partner at 3d-investors, points out the broader implications of de-globalization spurred by the war. “The tensions between the U.S., China, and Europe are significant”, he states, warning that these geopolitical divisions could disrupt the previously stable trade environment.

Sander Neeteson, Head of Corporate Finance at ABN AMRO, identifies the ongoing conflict in Israel as a significant geopolitical factor that could profoundly impact the European M&A climate. He underscores its critical nature, especially given its proximity to the developed world, which heightens the stakes compared to other conflicts. Neeteson notes that this situation compounds the already tense landscape created by the Russia-Ukraine war, leading to cumulative geopolitical tensions that disrupt business operations. He points out, “The potential impact on logistics chains, including the diversion of shipping routes, is a concrete example of how these conflicts can create ripples through the market.”

Echoing these concerns, Marco Gulpers emphasizes the challenges surrounding financing large transactions. “Securing and maintaining financing is the most significant factor”, he states, highlighting how direct lenders are becoming increasingly selective, focusing solely on the most attractive deals. This cautious approach leaves less lucrative opportunities to rely on traditional banks, which are tightening their focus on due diligence.

Compounding these issues is the persistent high inflation that Tom Snijckers, Partner at Oaklins Netherlands, notes is preventing any meaningful interest rate cuts by central banks. This financial environment complicates deal-making efforts further, as banks remain hesitant to provide takeover financing. Tom Beltman, Managing Partner at Marktlink Fusies & Overnames, points out that while banks may be involved in national deals, they often struggle with international structures, illustrating the need for a more robust European banking ecosystem.

The M&A landscape is also contending with increasingly critical competition authorities, as Nancy De Beule, Partner at PwC, observes. “Competition authorities have become more critical over the years. That's had an impact because when this happens sometimes the deal cannot continue”, she notes.