Consolidation and capabilities are the top two drivers of M&A deals, with businesses seeking to strengthen their market positions and access skilled talent.
Cross-border expansion and customer acquisition are also major motivators.
Innovation and R&D are increasingly vital, with companies focusing on creativity to drive growth, particularly in industries embracing AI and automation.
In the ever-changing world of M&A, understanding what drives deals is key for businesses and investors. The ‘10 C's’ framework, featured in the M&A Trend Survey Benelux, highlights the top motivations behind transactions, giving insight into what dealmakers and investors are focusing on.
By Jeppe Kleijngeld
Although M&A transactions are inherently risky (as we'll explore further in the sections on value creation and risks & challenges), they remain a common business activity across industries. In the M&A Trend Survey Benelux, conducted by M&A and Ansarada, we asked respondents to identify the key strategic reasons for pursuing M&A. These reasons often align with what we call the ‘10 C's’.
In the following overview, we will examine the 10 C's in order of importance, as ranked by dealmakers. We'll also explore why both strategists and private equity investors find these motivations compelling drivers for pursuing mergers and acquisitions.
10
Cash
Although cash isn't mentioned much in the survey, for some investors, it is a crucial part of their investment strategy. “As a mid-market investor, the key topics today are capabilities, cash, and consolidation", says Richard Reis, Partner at Argos Wityu. “These are crucial because, from a buy-side perspective, you need to be very cautious about downside protection risks. You mitigate those risks by acquiring companies that have strong internal capabilities and a solid cash profile. This shields you from exposure to debt and provides the capital necessary for investment, particularly in consolidation efforts.”
9
Channels
Acquiring new means of distribution such as online or bricks and mortar is a key driver of deals in sectors such as consumer goods, financial services, retail, and media & entertainment.
8
Content
“Content – acquiring new products and services – is on pole position because of new products driven by artificial intelligence", says Marcel Vlaar, Partner at RSM Netherlands. For a software investor like Fortino Capital, product expansion is indeed a major driver. Ida Kuijken, Partner at Fortino Capital, explains: “In the software world, this involves adding new features or products to a software suite, allowing our portfolio companies to offer a more comprehensive and valuable solution.”
"Our approach to add-on acquisitions is aimed at better serving customers – whether through gaining access to new customer segments or enhancing and improving features and services for existing clients"
Ida Kuijken, Fortino Capital
7
Capacity
Expanding production, storage, and/or distribution capacity through M&A is a critical strategy across a variety of industries, especially when quick scaling is needed to meet rising demand, reduce costs, or enhance geographic reach. A current trend in certain industries is vertical integration. This allows companies to control more of their supply chain. This can be particularly advantageous in industries where supply chain bottlenecks impact production, pricing, or delivery timelines. The Ukraine war caused many supply chain disruptions which put vertical integration on the M&A agenda.
6
Competition
Acquiring competitors or discontinuing an acquisition’s innovation projects to prevent future competition is a common M&A strategy. "The theme of 'Competition' – buying out competitors to secure a stronger market position – highlights the focus on market consolidation and reinforcing competitive strength", says Tim Boer, Partner at Axeco. "This approach aligns with companies seeking economies of scale and eliminating inefficiencies."
5
Creativity
In an era of rapid automation, electrification, and the rise of AI, fostering creativity through Research & Development should be a priority for every board. For Sander Neeteson, Head of Corporate Finance at ABN AMRO, it ranks among his top three deal drivers, highlighting the crucial role of innovation capacity in modern business strategies.
Creativity is a significant deal driver across many sectors. In the financial industry, for instance, there is a strong focus on creativity and innovation, notes Lieke van der Velden, Managing Partner at NautaDutilh. "Fintech companies are constantly developing new solutions, but maintaining a stable position in such a complex, regulated environment is challenging. At the same time, traditional banks are actively seeking ways to acquire innovative capabilities, fuelling transactions in the financial sector."
“Traditional banks are actively seeking ways to acquire innovative capabilities, fuelling transactions in the financial sector."
Lieke van der Velden, NautaDutilh
4
Countries
The selection of ‘Countries’ (new geographical markets) as the fourth most popular deal driver highlights the ongoing importance of cross-border expansion for Benelux companies. "Anything that supports company growth remains a critical driver across many sectors. For instance, access to international expansion has been a significant factor in several transactions we've overseen", says Karel Pinxten, Partner, Corporate Finance Advisory at Deloitte.
Benelux investors, such as 3d-investors, are actively helping their portfolio companies grow, develop, and internationalize. "When evaluating add-ons, much like an industrial trade buyer would, I focus on three key areas: content, countries, and customers – meaning access to new products or services, geographic markets, and client segments", explains Hans Swinnen, Partner at 3d-investors.
3
Customers
‘Customers’ – access to new customer segments – ranked third as a key driver of M&A activity, which is logical given that a larger customer base directly contributes to EBITDA growth. "Customers play a crucial role in expanding market share and reaching new customer segments, especially in industries where loyalty to certain companies has been historically strong", says Sjoerd Peijster, Investment Manager, Corporate Development at Strukton Groep.
For software investor Fortino Capital, customers are the central focus of their buy-and-build acquisition strategy. "Our approach to add-on acquisitions is aimed at better serving customers – whether through gaining access to new customer segments or enhancing and improving features and services for existing clients", explains Ida Kuijken, Partner at Fortino Capital.
“Consolidation is about achieving economies of scale through enhanced investments, innovation, and overall market strength.”
Philippe Craninx, Moore Corporate Finance
2
Capabilities
‘Capabilities’ emerged as the second most popular factor in the survey, highlighting the ongoing challenge of a tight labor market. Companies increasingly view acquisitions as a strategic way to swiftly access skilled personnel.
"Capabilities are a key driver, especially when it comes to new technologies like AI", observe Kuif Klein Wassink and Ico Jalink, Partners in M&A at Dentons. "It’s also critical to consider staff with expertise relevant to the energy transition." Tom Beltman, Managing Partner at Marktlink Fusies & Overnames, concurs: "Ultimately, it all comes down to people – the capabilities you acquire through a company."
1
Consolidation
The most frequently cited motivation for M&A in the Trend Survey is consolidation. This comes as no surprise, as both strategists and private equity firms are consistently focused on strengthening their market positions through this approach.
Joost den Engelsman, Head of Private Equity at NautaDutilh, explains: “My clients are primarily private equity investors. Their main focus is expanding capacity and accessing new customer segments to create national champions. International investors, on the other hand, often target new geographies with the aim of building European champions. Ultimately, the end game for this strategy is consolidation.”
Philippe Craninx, Managing Partner at Moore Corporate Finance, emphasizes that consolidation isn't purely about cost savings which is often thought of. “It is about achieving economies of scale through enhanced investments, innovation, and overall market strength.”
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