00:00So what is driving this renewed interest in M&A, do you think, in Europe?
00:04What I would say is, and I was here in November last year, and we had predicted that we would
00:09see a resurgence in corporate M&A,
00:11and that has really played out this in the first six months of the year.
00:15If you look at the 20 largest deals, which we basically had 20 deals above 10 billion, 15 of those
00:22are corporate deals.
00:23And these are deals that some of them we've been waiting for some time.
00:27You know, if you think about the TK elevator sale to Kona, that was sort of expected maybe last time
00:33around when Advent and Simen bought the business, but it happened now.
00:37So I think, you know, it sort of played out.
00:39And I think it's really this volatility, which paradoxically is actually driving more decisive dealmaking.
00:47Not making a decision and not going ahead, you know, in this uncertainty is probably a decision as well.
00:54So we are seeing more confidence and active forward-leaning stance than we've seen in a long time.
01:00So would you say capital markets activity is continuing despite the sort of volatile geopolitical landscape?
01:08Is that what we're seeing?
01:09Are we just more accustomed to a background level of volatility that we just have to accept as a new
01:15normal and get on with deals regardless?
01:17Yeah, I think that's right.
01:18I think that's right, combined with the fact that you have these sort of once in a generation, several generations
01:24maybe, change in technology, underlying change in technology around AI.
01:30And then you have geopolitical, obviously, volatility.
01:34But also, I would say, corporates are sort of realizing that they need to act.
01:39Corporate simplification has been a theme for some time.
01:42We are continuing to see that.
01:44For example, you know, the Volkswagen sale of AirVilance to Bain.
01:47Yes. I mean, we've talked a lot about private equity over recent years and how they've, in some cases, not
01:53been able to offload companies that they've wanted to either bring to market or to sell on.
01:58Is that going to get easier?
01:59Is it already getting easier?
02:00What does it mean for PE exits, the fact that we're seeing this activity?
02:03Yeah, I would say this.
02:05If you look at, if you take a step back and just look at the overall M&A market, M
02:08&A markets in volumes is up like 48, 50 percent almost.
02:12Europe is actually up 90 percent because we've seen a lot of, you know, the corporate deals, as I've mentioned.
02:20If you look at entries by private equity, that's also up.
02:24But it is true that, you know, maybe sponsor M&A was a little bit slower than we hoped for
02:30in the first quarter.
02:31We've seen a sequential uptick in Europe in Q2, and we believe that that's going to continue.
02:37Now, it is this sort of different kind of dealmaking, you know, selling into corporates, taking stock in exchange for
02:43instead of cash, for example.
02:46We're seeing continuation vehicles.
02:47We're seeing minority stake monetization.
02:49So the dealmaking is more varied.
02:51I would point out, though, that we've seen more entries and more deployment than, you know, last year.
02:58So that's really encouraging.
03:00And you mentioned technology and how we have such a, you know, changing landscape when it comes to technology.
03:04Is that proving to be a catalyst for M&A within Europe?
03:08For sure.
03:09Yeah, trying to get hold of the right technology quickly.
03:11Yeah, for sure.
03:12And, by the way, if you don't do it quickly, I think we just put out this report talking about
03:17the sort of volatility paradox and also another one around AI and how it's driving dealmaking.
03:24If you look at the industries which have been active in Europe this year, it's industrials and business services.
03:29Last year it was TMT.
03:31So it's interesting to see how that AI technology catalyst, I would call it, is driving M&A in other
03:38sectors than strictly tech.
03:40And we expect that to continue.
03:42And how is all of this being echoed in the IPO space, in the ability of companies to come to
03:47market, to raise funds?
03:49We've talked about successes this year, but we've also had stumbles, some from the defense sector, you know, spring to
03:55my mind.
03:56So what does the landscape look like for IPOs?
03:58Yeah, listen, going public is, you know, it's a start of a journey, I often say.
04:03And, you know, I worked on many IPOs over my career and, you know, it's rare that you see a
04:11sort of straight line, particularly in this uncertain geopolitical volatility, etc.
04:16What I would say, though, capital markets are open.
04:19Capital markets want to fund growth.
04:22And we, you know, expect the best companies to be able to come to market.
04:27Now, if you have an event which happens exactly around your transaction, it's probably not the most prudent thing to
04:32go.
04:32Because you do want to deliver on returns for investors from day one.
04:36So I would say, yes, capital markets are open.
04:39We expect to see continued IPO activity.
04:42But it's not going to be a straight line.
04:43It never is.
04:44Yeah, never a straight line.
04:45The AI theme has been so dominant in the U.S. and Asia, certainly.
04:49Less so in Europe.
04:49But there are opportunities within the AI space in Europe.
04:52They just look a bit different.
04:53That's what a lot of people are telling us.
04:55So how does that, how does that, the AI landscape impact on Europe?
05:01Is there less crowding out of other themes in Europe than maybe is happening in the U.S. and Asia?
05:07Yeah.
05:07Listen, first of all, I'm super excited about the opportunity for AI and technology broadly for European companies.
05:13We have a very, very strong base of highly performing industrial companies.
05:18I mentioned industrials being one of the most active sectors in M&A this year.
05:23I think that's going to continue.
05:24Industrial tech, European companies are optimally placed to take advantage of that.
05:28So that's an exciting theme.
05:30Business services, financial services.
05:32Listen, I think in healthcare, I mean, I could go on, right?
05:35Like, I think what we saw being mainly a tech-based activity, maybe in 24 and 25, has already spread
05:44to other industries.
05:45And I think it's going to be a catalyst for M&A.
05:47And if we want to get excited about that, we keep asking the CEOs about return on investment, you know,
05:52from AI.
05:53And we don't always get a lot of detail on that front.
05:56And it's quite difficult.
05:57It's quite, the sort of costs and benefits seem quite dispersed around the P&L.
06:01So difficult to say exactly what it's delivering.
06:04Do you see the evidence you need?
06:06Are the clients you talk to really confident that they're getting what they need from their investment in AI?
06:13Maybe a couple of points.
06:14First of all, taking a step back.
06:15It's called a frontier technology, a generational technology, for a reason.
06:20This is going to play out over many, many years, even decades.
06:23And therefore, I understand our clients who do not want to necessarily sort of put hard numbers up front today.
06:29It would probably be a mistake to do so because it's going to play out.
06:32So what are they doing?
06:33They're identifying areas where they're going to see the benefits.
06:36We do so ourselves, you know, be it in client engagement, be it in certain of these work streams that
06:42we have, work processes that we have identified.
06:45So I understand.
06:46I wouldn't say it's a reluctance to come into numbers.
06:49It's being strategic with this technology.
06:52And that, I think, is the right thing to be.
06:54And this boom, if we can call it that, that we're seeing in M&A and this corporate activity, does
06:58it withstand higher rates?
06:59Do you think we're going to end up in a position with higher rates than, Anna, if we get, you
07:03know, the Fed is in focus this week, the Bank of England, the BOJ.
07:07But we've seen a hold from the ECB, of course.
07:09But are you expecting higher rates?
07:11And will that disturb what we're seeing?
07:13Yeah.
07:13Listen, financing markets are super conducive.
07:15Like, they are there to finance both strategic M&A, this CapEx way we're seeing, you know, rates may, you
07:22know, may move.
07:23But I just don't see that putting a lid on this activity because it's strategic.
07:28It's multi-decade.
07:30And it's exciting.
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