Top M&A Trends in 2024

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Published by Mateusz Muszynski
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The M&A market has been a roller coaster over the past few years. The landscape has evolved from the turbulence of the pandemic. M&A has hit highs during the recovery and subsequent lows. As we move further into 2024, it’s crucial to understand these shifts and anticipate the trends that will shape the future of M&A.

Let’s Review: How We Got Here —The Pandemic Era

The pandemic era has been transformative for the M&A market. Each phase, from the early days of COVID-19 to the subsequent recovery and volatility, has impacted how companies approach and execute deals.

A Timeline of Recent Events

  • Pandemic Flash Crash: The global outbreak of COVID-19 in early 2020 triggered an unprecedented economic downturn. Stock markets worldwide dropped, and the immediate uncertainty led to a near halt in M&A activities. Companies focused on survival, conserving cash, and stabilizing operations rather than acquisitions.
  • Valiant Recovery: By the second half of 2020, the market began to show signs of recovery. Governments and central banks took extreme monetary and fiscal stimulus measures, injecting liquidity into the economy. This support, combined with advancements in vaccine development, boosted market confidence. Companies that adapted to the new normal started exploring M&A again. Many aim to position themselves for the post-pandemic world.
  • Record Years in 2020 and 2021: The recovery gained momentum, leading to record-breaking M&A activity in 2020 and 2021. Low interest rates and abundant capital fueled a surge in deals. Businesses sought growth through acquisitions, capitalizing on favorable financing and accelerating digital efforts. Mega-deals and high-profile mergers became commonplace, setting new records for deal volumes and values.
  • Steep Drop Off in 2022: Responding to rising inflation, central banks began increasing interest rates. This made financing more expensive and less accessible. Also, geopolitical tensions, supply chain disruptions, and a bear market in equities created more challenges for deal-making. These factors led to a huge slowdown in M&A. Companies became more cautious and prioritized operations and cost management over expansion.

What’s Next? What the M&A Market May Hold in 2024

As we move through 2024, the M&A landscape is poised for new developments and trends. Understanding the past and anticipating the future is crucial for companies looking to navigate this dynamic market.

Identifying Recent Trends and Reading the Room

  • 2023 Review: The first quarter of 2023 showed a resurgence in global M&A activity, marked by a series of big deals that reignited the market. Despite the challenges of 2022, companies began to regain confidence, leveraging acquisitions for growth. This uptick was driven by technology, healthcare, and energy sectors. These areas saw huge deal flow as businesses sought to strengthen their positions and invest for the future.
  • Thus Far in 2024: Early 2024 has maintained this momentum with a steady flow of deals. Globally, M&A deal volume was up 30% to $755 billion in the year’s first quarter. The biggest benefactors of this have been the U.S. and European markets. U.S. M&A volumes increased 59% to $432 billion, and European deals were up 64%. That’s in contrast to a 40% slump in the Asia Pacific region.
  • Factors to Consider for the Second Half of the Year: Several factors will influence M&A activity in the second half of 2024. These include economic conditions, such as interest rates and inflation trends, geopolitics, and regulatory changes. Also, the continued impact of technology and the emphasis on sustainability and ESG (environmental, social, and governance) criteria will shape deal-making strategies. Companies must remain agile, adapting to seize opportunities and navigate challenges.
  • Contrasting Views from Industry Research Giants: McKinsey highlights the growing value of digital and sustainable acquisitions. Companies are prioritizing deals that enhance their technology and align with ESG goals. On the other hand, PwC focuses on divestitures and portfolio optimization. This suggests that companies are also looking inward, shedding non-core assets to streamline operations and fund growth.

Top 5 M&A Trends to Watch

As we delve deeper into 2024, several key trends are emerging that will shape the M&A landscape.

Here are the Top Five Trends to Watch

  • Focus on Digital and Tech-Driven Deals: Companies are pursuing acquisitions that bolster digital capabilities. This trend is driven by the need to stay competitive in a digital world. Businesses are targeting firms with cutting-edge technologies, such as AI, cybersecurity, and data analytics. This can enhance offerings and streamline operations.
  • Sustainability and ESG-Driven Transactions: ESG factors are becoming more common in M&A decision-making. Companies are prioritizing acquisitions that align with sustainability goals, seeking to improve their ESG profiles and meet investor and regulatory expectations. This trend reflects a shift towards responsible investing and sustainable growth.
  • Activity in Cross-Border M&A: Despite geopolitical tension, there is a growing trend towards cross-border deals. Companies are looking to expand their footprint and tap into new markets. This trend is big in sectors like technology, pharmaceuticals, and consumer goods.
  • Private Equity’s Growing Influence: Private equity (PE) firms continue to play a huge role in the M&A market. With ample dry powder and a focus on high-growth sectors, PE firms are driving many deals. They are pursuing buyouts and exploring innovative deal structures, such as joint ventures and partnerships.
  • Sector-Specific Consolidation: Certain industries are consolidating as companies seek to strengthen market positions and achieve economies of scale. For example, the healthcare and biotech sectors are seeing a surge in M&A due to ongoing innovation and the need for integrated solutions. The energy sector is also seeing consolidation. That’s driven by the transition to renewable energy and the need for sustainable infrastructure.
  • Result of All These Changes: the M&A landscape is becoming more complex. Specialization will be a coveted skill for a long time—both M&A advisors and their clients stand to be big benefactors of this, with both parties gaining value from the partnership, maybe now more so than ever before.

Final Thoughts: Top M&A Trends in 2024

Believe it or not, the year is already halfway behind us. As we look ahead to the rest of 2024, the M&A landscape remains dynamic and full of potential. Let’s recap the key points we’ve covered.

  • Reviewing the Pandemic Era: The COVID-19 pandemic caused a crash in the M&A market, followed by a remarkable recovery and record-breaking activity in 2020 and 2021. However, 2022 slowed down due to economic challenges and increased caution.
  • A Hangover from the Euphoria: The record years of 2020 and 2021 were followed by a steep drop-off in 2022, as companies faced higher interest rates, inflation, and market volatility. This shift underscored the need for caution and operational efficiency.
  • Where We Go From Here: In 2024, several trends are shaping the M&A landscape. Companies are focusing on digital and tech-driven deals, prioritizing ESG factors, and exploring cross-border transactions. Companies are also leveraging private equity and sector-specific consolidation.
  • The Importance of Teaming Up with Advisors: Navigating the complexities of the M&A market requires experts. Partnering with experienced advisors can help companies find opportunities, mitigate risks, and execute transactions, regardless of how the market trends evolve.

We hope you’ve found this article useful when learning about the top M&A trends in 2024. If you’re interested in reading more, please subscribe below to get alerted of new articles as we write them.

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