This comes after a sluggish year in 2023, which saw the lowest merger and acquisition (M&A) activity in a decade across many venture capital (VC) markets globally.
According to Tenet Consulting, the subdued M&A activity in 2023 raised concerns about the investment landscape’s health. However, the expected decline in interest rates in 2024 generates optimism for a resurgence in Initial Public Offerings (IPOs) and M&A deals, potentially normalizing valuations and reviving investor confidence.
“The forecasted interest rate decline carries significant implications for valuation dynamics. Lower interest rates generally translate to cheaper borrowing costs, incentivizing businesses to pursue expansionary strategies such as mergers and acquisitions,” stated Alexey Bogdanov, Partner at Tenet Consulting. “Moreover, the prospect of reduced borrowing expenses could entice more companies to go public, tapping into the equity markets to fuel growth initiatives.”
The global trend of reduced VC investments impacted the MENA region as well, but the region’s significant support from government-related entities has always played a crucial role in fostering local tech ecosystems. This support is expected to drive a rebound in investment activities in 2024, particularly in Saudi Arabia and the United Arab Emirates, which are anticipated to lead in dealmaking.
Participants at the third edition of VC Weekend by Gingo Partners, where Tenet Consulting presented its study on Global Startup Valuation Trends, left with renewed optimism. The event highlighted the potential for increased investment activity and stronger regional venture capital ecosystems.
