M&A in 2024: Rising optimism while navigating a ‘new norm’

January 12, 2024 | Blog

M&A in 2024: Rising optimism while navigating a ‘new norm’

Looking at the latest headlines, forecasts for M&A in 2024 are filled with ‘resurgence’, ‘momentum’, and ‘strength’, and are seen as ‘encouraging’, ‘rebounding’, and ‘rising’. Is it fingers crossed after a 2023 many dealmakers would prefer to forget? Or is there real reason for optimism ahead?

Recently, Datasite, in partnership with the Financial Times, presented a Global M&A Outlook Series to discuss M&A activity and trends across EMEA, APAC, and the Americas and the strategies dealmakers can leverage to revive dealmaking in 2024.

Watch the video replays >

Looking back: A challenging year for M&A

Looking back likely isn’t filling many dealmakers with great joy. Rising interest rates, regulatory scrutiny, geopolitical challenges, and economic uncertainty all heavily impacted dealmaking in 2023. Global M&A volumes hit a 10-year low in Q3 2023, while private equity deal value dropped 41% versus in 2023, per the London Stock Exchange Group data.

In EMEA, while few expected to see the heady highs of 2021, there was a persistent optimism that 2023 would produce some good numbers. Unfortunately, that hasn’t happened. In Q3, the region saw M&A deal volume and value decline by more than 25% both QoQ and YoY. And the decrease in volume of big deals worth over €10bn euros has been particularly evident, dropping around 40% over the first nine months of the year compared with the same period in 2022.  

APAC fared a bit better, and better than both EMEA and the Americas, with deal value down just 10.5% YoY at Q3 and up 2% QoQ. However, deal value slipped by over 20% both QoQ and YoY. And the region experienced a 20% drop in M&A, PE, and venture financing activity over the past year.

And in the Americas, while deal value saw an uptick YOY at Q3 2023, it was still down from Q2, and volume fell by over 30% both YoY and QoQ. Moreover, M&A deals worth $10 billion or more fell by 42% during the first nine months of this year compared to the same period last year. 

M&A moving forward: More deals, one quarter at a time

Nevertheless, dealmakers seem genuinely optimistic about M&A activity in 2024, despite the ongoing challenges of geopolitical issues and rising interest rates. Obviously, dealmakers would love to see a recovery – and sooner rather than later. However, it looks like it may still take a few months to come to fruition. According to dealmakers polled at the webinar, Q3 could be the turning point for M&A, although APAC still could have a longer road ahead.

Why? While no one has a crystal ball, it’s not just blind faith. The impacts of disinflation are starting to creep in, as well as the potential knock-on easing in monetary policy. This means valuations are easier. Which in turn makes people more comfortable with doing deals.

Datasite, which has facilitated over 100,000 M&A transactions on its platform, has seen an uptick of new projects start in the last three months, which are expected to close in the next six to nine months. It’s clear that pipelines are growing, more assets are coming to market, and both buyers and sellers are adjusting to the higher cost of capital.

However, the types of deals that will dominate are still to be determined. Regional differences and challenges look certain to impact activity. Whatever happens, dealmakers are intent on successfully navigating yet another ‘new normal’ for M&A.

To hear more about M&A challenges, trends, and strategies in 2024, tune in to the webinar replays for insights from expert panelists from AMERSEMEA, and APAC.

Global M&A Outlook Series - On-Demand
in partnership with the Financial Times