Goldman’s Mechain Says France M&A to Pick Up Despite Politics

Goldman Sachs's Marc Mechain, co-head of M&A for France, forecasts a pickup in French M&A activity, despite the political uncertainty from upcoming snap parliamentary elections and a 31% decline in H1 2024 deal volume to $63.8 billion. Mechain attributes this expected rebound to a robust deal pipeline, strong private equity interest, and increased corporate divestitures of non-core assets, signaling potential resilience in the French deal market.

Analysis

Despite a challenging first half of 2024, which saw French M&A deal volume decline by 31% to $63.8 billion, a senior Goldman Sachs banker forecasts a significant pickup in activity. This optimistic outlook persists even amid political uncertainty created by upcoming snap parliamentary elections. The key drivers underpinning this forecast are a robust deal pipeline, strong and persistent interest from private equity, and an acceleration in corporate divestitures of non-core assets. This suggests that fundamental strategic drivers for deal-making may be resilient enough to overcome near-term political volatility, pointing to a potential recovery in the French M&A market in the latter half of the year.

Key Decisions for Investors

• Investors should identify potential French M&A targets, particularly companies with non-core assets that are likely candidates for divestiture or acquisition by private equity.
• While the M&A outlook is positive, the political uncertainty from the snap elections is a significant near-term risk; positions should be monitored closely and potentially hedged until the political outcome and its market impact become clearer.
• Consider exposure to sectors that benefit directly from increased deal-making, such as investment banking and advisory firms with a strong presence in the French market.