M&A Trends and Outlook for 2024

Over the last couple years, the mergers & acquisitions (M&A) space has seen its fair share of ups and downs. Challenging macroeconomic factors— from post-pandemic conditions to burgeoning interest rates and fluctuating inflation—have resulted in continuous fluctuations in deal activity.

Now, in the last few months of 2024, the appetite for dealmaking is higher than ever, especially with recent positive developments such as stable interest rates, decelerating inflation, and a record amount of dry powder. 

Using the AlphaSense platform, we uncovered the key trends, opportunities across sectors and geographies, and factors shaping the M&A space in 2024 and beyond.

2024 Mergers and Acquisitions Trends at a Glance

Deal Activity and Flow Resurgence

After a slow 2023, deal activity and flow have been stabilizing and resuming growth at a steady pace throughout 2024. With the Fed’s interest rate cut in September 2024 combined with increasing demand for private investments, deal activity has made a notable return and is expected to increase substantially in the coming months. In Q2 2024 alone, private equity deal activity saw its strongest quarter in two years, with over 120 deals announced valued at $196 billion. It was also the strongest period for capital deployment since Q3 2022.

Emphasis on Generative AI

An increasing number of companies are prioritizing deals that enhance their tech stack and put them at the forefront of the genAI race.

Dealmaking in Financial Services

In an effort to keep pace with digital transformation, banks and legacy financial institutions are acquiring fintech startups to modernize their offerings, digitize services, and compete with emerging players in the space. 

Healthcare, Tech, and Renewable Energy Are Hot Topics

These areas are attracting the most attention from dealmakers around the world, as they are particularly poised for transformation and rapid growth.

Strong Focus on Sustainability Practices

Around the world, investors are favoring companies with demonstrated commitments to sustainability practices. 

Signs of Slowing Organic Growth

With macroeconomic factors and monetary policy stunting organic revenue growth in many countries, companies are turning to M&A as part of their inorganic growth strategies to compensate.

Brink of Change

Elevated valuations, upcoming political elections, and recent interest rate cuts are all contributing to a dealmaking environment that could be on the precipice of transformation.

M&A Trends by Industry

Healthcare

In the past few years, the healthcare sector has faced persistent headwinds, including soaring interest rates, market volatility, steep inflation, FTC regulatory challenges, and supply chain issues—which has led to slowdown in M&A activity.

However, analysts are optimistic about an upcoming deal resurgence, due to the large number of healthcare transactions that closed at the beginning of 2024 and were announced in late 2023. And with steady interest rates promising broader economic stabilization, it’s likely this uptick will continue for the foreseeable future. 

Over half of all healthcare CEOs intend to make at least one acquisition in the next three years, according to PwC’s Annual Global CEO Survey. With pharma companies sitting on an estimated $171 billion in cash reserves, M&A deal activity is expected to heat up in 2024 and beyond. 

Some of the top trends currently driving healthcare dealmaking forward include the impact of AI on pharma, the race to bring GLP-1 assets to market, strategic consolidation of healthcare systems, and niche medtech acquisitions to expand and diversify capabilities. 

For a deeper dive into M&A in healthcare, and more details on these trends, don’t miss M&A in Healthcare: 2024 Outlook. 

Technology, Media, and Telecommunications (TMT)

After the tech sector experienced a sharp downturn in 2022, we saw a major bounceback in 2023 as artificial intelligence—and generative AI, in particular—captured the attention of individuals, professionals, and investors across industries. 

Now, tech companies are keen to expand their AI capabilities in order to remain competitive in the rapidly changing tech landscape, and M&A provides a perfect avenue for doing so. Experts predict that thousands of new AI startups will begin sprouting up in the next couple years, and they are all likely to become M&A targets for larger tech companies. 

Additionally, there is increasing overlap between the technology sector and other sectors, as more industries move toward digital transformation and incorporate technologies such as cloud computing, 5G, and generative AI into their strategies. For example—tech companies are increasingly looking for opportunities in the healthcare space, with subsectors such as medtech and medical devices on a steep growth trajectory.

Tech dealmaking has not quite regained its footing since the downturn, but deals are steadily picking up and are expected to keep increasing in volume, particularly as generative AI continues to be a hot commodity and as macroeconomic pressures ease up. 

Energy

The transition toward carbon neutrality has been a major area of focus for energy companies, with many turning to M&A to boost their competitive advantage and position themselves as leaders in this trend, according to Morgan Stanley. 

2024 has been an eventful year for the energy M&A space. The end of 2023 brought two high-profile deals—Chevron and ExxonMobil acquiring Hess and Pioneer, respectively, with the goal of scaling and reinforcing the core components of their existing portfolios.

A flurry of deal activity followed suit, with 90% of all energy deals this year being in the traditional oil and gas space. This reflects the sector’s sentiment that consumers and businesses will depend on oil and gas for the foreseeable future, so investing in these core positions is a strategic priority. Some deals have also signaled a shifting dynamic in the energy landscape—a plethora of dealmaking opportunities in the Permian basin.

In the midst of this rampant deal activity, regulatory scrutiny has also increased, with lawmakers keen on maintaining healthy market competition.

Industrial, Manufacturing & Automotive

Deal activity in the industrial, manufacturing, and automotive sectors is expected to stay stable for the rest of 2024—both buyers and sellers are continuing to turn to M&A to drive growth and value creation. Mostly, companies in this industry are looking to acquire new technologies and digital capabilities to expand their market presence and stay competitive.

The top trends driving M&A activity in this sector include: innovative technologies (such as EVs, cloud technologies, and robotics), artificial intelligence, supply chain resilience, and sustainability initiatives. 

Strategic M&A will be key in 2024, focused on companies with strong R&D, innovative products and industrial value-added services. I expect new M&A opportunities to be created in dynamic sectors experiencing rapid technological advancements such as aerospace and defense, electric vehicles, and business services.”

– Nicola Anzivino, Global Industrial Manufacturing and Automotive Deals Co-Leader | PwC Italy

Financial Services

The financial services sector has seen limited dealmaking activity in 2024—a result of continued uncertainty due to macroeconomic challenges and unfavorable deal conditions. However, there is ongoing pressure on the investment industry to drive initiatives like digitalization and sustainability, and M&A remains one of the most effective tools for facilitating this transformation.

Due to the highly regulated and risk-averse nature of this industry, experts believe we will likely see fewer megadeals and a greater number of smaller niche transactions, with deal processes likely to increase in duration as analyses become more complex.

The current market is very challenging for all FS deal participants, but I firmly believe that now is the time—when others may be hesitating—to take advantage through acquisitions or disposals in order to solidify future positioning.”

– Christopher Sur, Global Financial Services Deals Leader | PwC Germany

Related Reading:  5 Ways Expert Insights Lead to Successful M&A

Global M&A Trends

United States

After hitting bottom in 2023, the US M&A market has been steadily rebounding throughout 2024. Most deals are motivated by technology advancements and energy transition opportunities. Generative AI is a hot topic across all industries, and companies are increasingly using M&A to acquire new tech capabilities and remain competitive. At the same time, the energy transition continues to be top of mind, leading to renewed interest in renewable energy acquisitions. 

Healthcare M&A has also been active in the past year, bolstered by trends like artificial intelligence, weight loss drugs, and new innovations in medical devices and medtech. Many of these trends are driven by key players among the largest companies by market cap, whose financial strength often shapes the M&A landscape.

In September 2024, the Fed cut interest rates for the first time in four years, setting the stage for an even greater resurgence in deal activity. However, the upcoming presidential election remains a variable within the M&A landscape, as either candidate’s win would have varying implications on dealmaking.

United Kingdom

After a persistent slowdown in deal activity, owing to a number of headwinds—including high inflation, macroeconomic turbulence, a potential recession, geopolitical instability in Europe, and regulatory uncertainty—2024 has shown growth and resilience in the UK M&A market. Corporations are feeling the pressure to advance their tech capabilities, particularly cloud and genAI. Additionally, the energy transition and net-zero targets are fueling M&A activity in the energy and renewables sectors. 

According to equity research in the AlphaSense platform, the quantity of potential deals that are currently in the pipeline in the UK could suggest a record level of UK M&A in terms of deal volume since 2010. Private equity remains a substantial source of deals, accounting for roughly 40% of all UK deals in 2024.

Finally, the recent UK general election, which resulted in a Labour Party win, has brought more stability to the political and economic climate and is expected to encourage more dealmaking in the end of 2024 and beyond. 

Canada

In 2023, deal volume and value substantially decreased, though deals in the energy, mining, utilities, and industrials sectors were significantly more robust than others. This trend has persisted into 2024, though deal volumes have been fluctuating quarter-to-quarter. The overall M&A outlook for critical minerals is positive, as miners position themselves for the energy transition and supply chain participants become more concerned about future supply of critical minerals.

In fact, critical minerals are expected to be one of Canada’s most active sectors—and a key driver of M&A and investment activity—in the next few years and through the next decade. 

Latin America (LATAM)

Latin America is currently attracting significant and diverse foreign investment, particularly in the critical minerals, renewables, and manufacturing sectors. A key investment dynamic to watch will be the launch of bidding rounds in the Chilean lithium sector, as well as additional lithium investment opportunities in Argentina. 

Lithium is currently a prized commodity due to its utility in electric vehicles and batteries for storing energy from renewable power plants. The demand for lithium is only expected to grow as a result of global energy transition goals. Due to the abundance of lithium in the LATAM region, we expect to see future M&A deals that allow foreign companies to capture ownership over lithium stores in the region.

India

Of all the regions discussed in this article, India has had one of the most consistently high-performing M&A landscapes in the past few years. After a record 2022, the M&A market in India maintained its momentum throughout 2023 and into 2024.

Dealmakers are expecting high M&A activity in the region to continue or even improve. This means more competition for deals and sustained valuation across sectors. Midmarket and conglomerate buyers will need to more rigorously assess their due diligence capabilities and their capacity for post-deal value creation. As more assets become available and competition increases, thorough due diligence will be critical for winning deals.

Related Reading: M&A Due Diligence: A Complete Guide

Middle East

2023 was a low year for deal activity in the Middle East, compared to the previous two, largely as a result of fear of a global or multi-regional recession. In 2024, dealmaking activity grew significantly, largely driven by the United Arab Emirates and Saudi Arabia. Overall, investors dominating the M&A landscape have continued to be regional sovereign wealth funds (SWFs) and government related entities (GREs).

At the same time, cross-border M&A has been readily supported by the United Arab Emirates investor-friendly regulations. 

ESG remains a focal point in dealmaking for this region, particularly following the commitments made during COP28 in Dubai in late 2023. Otherwise, technology and mining deals account for another substantial portion of M&A activity.   

M&A Outlook in 2024 and Beyond

While certain challenges from 2023 persist, 2024 has thus far marked a year of M&A resurgence. Even with these challenges, the M&A landscape is bolstered by new technologies bringing new opportunities to various sectors and encouraged by interest rates dropping from historic highs. In this simultaneously hopeful and uncertain environment, the time is ripe for developing a strong M&A strategy. 

With the ongoing transformation of the business landscape—driven by the rise of AI, digitalization across most industries and consumers’ lives, and a growing focus on sustainability—come new opportunities for strategic M&A moves.

Additionally, with the current abundance of dry powder and a growing convergence between buyer and seller pricing expectations, we expect a continued influx of new deals this year and beyond. In particular, the biggest dealmaking themes we expect to see are digitalization, sustainability initiatives, supply chain resilience, and value creation. 

Digitalization – The generative AI boom has put digital transformation at the forefront of most executives’ and investors’ minds. Dealmakers are racing to stay on the leading edge of this new trend, as it has the power to move markets. M&A remains one of the most effective means of acquiring new technology and talent to fuel this digital transformation. Corporations are likely to seek out opportunities to invest in targets in the cybersecurity, cloud computing, and AI spaces.

Sustainability Initiatives – The strong focus on the renewable energy space is expected to continue, as companies and countries strive to meet energy transition targets. According to Patrice Viaene, Counsel in the M&A Infrastructure Team of Clifford Chance: “Investment will be driven by a desire to capitalize on emerging technologies that could have global applications as we strive to become carbon neutral.”

ESG will continue to play a massive role in worldwide and industry-wide dealmaking. Corporations will look to M&A as a way of amping up their ESG scores and integration strategies, especially as investors scrutinize businesses on their commitments. 

Supply Chain Resilience: Corporations are also staying focused on building supply chain resilience, in the form of nearshoring, friend-shoring, and other regionalization strategies. M&A remains a powerful means of executing on those goals.

Value Creation: Tying the above themes together, value creation will continue to be a top priority for investors. Now more than ever, there is a need to identify transformational value drivers to help realize each deal’s full potential.

Experts warn that despite the promising conditions expected in 2024, there are still challenges to contend with—such as a higher cost of capital and regulatory scrutiny. And even though certain sectors and geographic regions have been less affected by the M&A downturn, the effects are felt globally. 

 

In this fluctuating environment, smaller, mid-market deals are more likely to succeed than larger ones. Corporates with strong balance sheets and established M&A processes will continue to have a competitive advantage. Megadeals are likely in the life sciences, energy, and utilities industries, as these industries are particularly affected by trends like digitalization, decarbonization, and technological innovation.

Overall, the outlook for the remainder of 2024 is optimistic. Conducting thorough due diligence, keeping up to date on macroeconomic trends and regulatory updates, and prioritizing sustainable business transformation and digitization remain some of the best ways to ensure success in M&A and other strategic ventures—regardless of how the markets are moving.

Stay On Top of the Evolving M&A Landscape With AlphaSense

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