2024 M&A Trends and Future Outlook in Five Charts
1. Corporate M&A Activity is Gaining Momentum
In 2023, global M&A activity slowed significantly, with deal volumes dropping 27% compared to the previous year. However, 2024 is expected to see a resurgence, primarily driven by stronger corporate balance sheets and improving market conditions.
Companies are increasingly looking to M&A as a way to drive growth, especially in sectors facing slow organic expansion. With CEO confidence on the rise, the willingness to engage in mergers, acquisitions, and strategic partnerships has grown.
Corporations are now looking beyond mere survival and focusing on long-term growth strategies. Improved financing markets, alongside a rebound in equity valuations, have provided an opportunity for dealmaking to accelerate. CEOs in sectors such as technology, energy, and healthcare are particularly optimistic, expecting increased revenue growth and profitability in 2024.
2. Sector-Specific Drivers: A Focus on Technology, Energy, and Healthcare
Several sectors are expected to dominate M&A activity in 2024 due to unique industry-specific dynamics. The technology sector will continue to see investments, especially in AI, cybersecurity, and cloud services. With the rise of digital transformation, companies are seeking acquisitions to bolster their digital capabilities and secure competitive advantages.
Meanwhile, energy and utilities are poised for significant consolidation as companies pursue larger-scale operations and diversification into renewables. Major energy players will likely focus on acquiring assets that help them transition to cleaner energy sources, while also securing access to critical minerals needed for battery production in electric vehicles (EVs).
In healthcare, pharmaceutical companies are keen to acquire biotech firms to replenish their product pipelines and address upcoming patent cliffs. Additionally, as companies face pressure to innovate, biotech acquisitions will be a key strategy to ensure continued growth.
3. The Return of Megadeals
While 2023 saw fewer megadeals—transactions valued at over $10 billion—2024 is expected to see a resurgence of these large-scale transactions. With economic conditions stabilizing, particularly in the U.S. and Europe, more megadeals are likely to emerge, especially in the technology and energy sectors. In 2023, megadeal activity accounted for a significant portion of total M&A deal value despite lower deal volumes.
The improving stock market performance is also playing a role in this revival. Companies are more inclined to use stock as currency for large transactions, avoiding the need for debt financing in a high-interest-rate environment. This trend is expected to continue, particularly in capital-intensive industries such as oil and gas.
4. Private Equity's Increased Role
Private equity (PE) firms, which saw a subdued year in 2023 due to higher borrowing costs and tighter financing conditions, are expected to increase their activity in 2024. With approximately $300 billion in dry powder available, PE firms are well-positioned to take advantage of distressed assets and businesses undergoing restructuring.
Moreover, the expected decline in interest rates and improved financing conditions will make leveraged buyouts more attractive. As valuations begin to stabilize, PE firms are likely to target mid-market deals and specific industries with high growth potential, such as healthcare, technology, and consumer products.
5. Geopolitical Shifts: The Role of Emerging Markets
The global M&A landscape is witnessing a shift, with emerging markets, particularly in the Asia-Pacific (APAC) region, becoming increasingly attractive for dealmakers. While 2023 saw declines in both deal volumes and values across APAC, 2024 is expected to see a rebound as multinational companies look to capitalize on growing consumer markets in countries like India, Indonesia, and Vietnam.
India, in particular, is emerging as a hotspot for M&A due to its strong economic growth and favorable demographic trends. Meanwhile, Japan’s M&A market, buoyed by a stable financial environment and low interest rates, is also set to grow, especially as Japanese companies pursue acquisitions to strengthen their global footprint.
In conclusion
The M&A landscape in 2024 is shaping up to be dynamic, with dealmakers poised to take advantage of improving economic conditions, sector-specific opportunities, and the return of megadeals. Corporate activity is expected to pick up, driven by renewed CEO confidence, while private equity firms will play a more active role in pursuing mid-market opportunities. Additionally, emerging markets like India and Southeast Asia will attract increased dealmaking as global companies look to tap into fast-growing economies. As the year unfolds, M&A will continue to be a critical lever for companies aiming to grow, innovate, and stay competitive in an increasingly complex global economy.
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