The consolidation of markets is one of the dominant themes in current M&A activity, both in Germany and internationally. As an M&A consultancy, we have advised on numerous transactions in various sectors in recent years. This article provides an overview of what is meant by market consolidation, which sectors are currently particularly affected, which buyer groups are active and how we provide our clients with targeted support in this environment.
What does market consolidation mean?
Market consolidation occurs when there is increasing market concentration within an industry, for example through a series of takeovers or mergers, which reduces the number of market participants and concentrates market share on a few larger players. The aim is to bundle structures, exploit economies of scale and compete more effectively. For buyers, this offers opportunities for growth, while for sellers it is often an opportunity to find a sustainable succession solution.
Where and why is consolidation taking place?
Consolidations are often the result of structural changes: In many sectors dominated by SMEs, succession planning is imminent, while regulatory and technological requirements are increasing at the same time. This makes smaller companies vulnerable and larger providers or investors take over. Past examples show the extent to which consolidation processes can change entire sectors, such as in the German automotive supply industry, where smaller companies have merged into a few large groups over decades. We are currently observing similar developments, for example in insurance sales, in the construction sector, in the IT services industry and in the building technology sector – wherever a shortage of skilled workers, digitalization and succession pressure interact.
Strategic buyers and financial investors
Both strategic buyers and financial investors play a key role in shaping this development. While strategic buyers aim to acquire additional expertise, new customers or a regional presence, financial investors are increasingly pursuing the strategy of using a well-positioned company as a starting point and expanding it step by step through further acquisitions.
Our experience – your advantage
We regularly support transactions in consolidating markets – both on the buy and sell side. Our in-depth understanding of the sector, our experience in the SME sector and our access to relevant decision-makers enable us to bring together the right partners in dynamic market phases.
Would you like to find out more about market consolidation in your sector?
Talk to us – we look forward to the exchange!
Your contact persons: Jan Mayerhöfer, Tim Hagemann
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