After a sharp downturn in 2023, the outlook for 2024 is promising, as evidenced by the avalanche of major transactions that closed in the first quarter. Here are some insights from the experts at AURIS Finance, a consultancy specialising in mergers and acquisitions.
Could this be the start of a recovery? After a lacklustre 2023, punctuated by a sharp decline in global transactions, 2024 is shaping up well. In the first quarter, according to Dealogic, total global M&A volume rose 30% to $755.1bn. All geographic regions were impacted by the rebound: in the United States, M&A volume rose 59% to $431.8 billion, while European transactions jumped 64%. This is an upturn that private equity players have been predicting and hoping for since the beginning of the year. For the co-founder and chairman of investment firm Carlyle, fears of a recession have been allayed. Back in January, David Rubenstein predicted an imminent fall in interest rates, which he said would allow M&A and private equity activity to pick up.
Transactions in excess of $10 billion are back on track
During the first half of the year, the increase in transactions was largely driven by mega deals: The number of transactions worth more than $10 billion rose to fourteen from just five a year earlier. One transaction topped the list: Capital One’s takeover of Discover Financial for $35.3 billion. In addition to the banking sector, the energy sector is also showing signs of recovery, as evidenced by the merger of two oil and mining giants. In early 2024, US shale oil producer Diamondback Energy acquired Texas-based independent oil and gas company Endeavor Energy for $26 billion.
Tech is on the rebound too
The first quarter was particularly marked by a rebound in the technology sector, which has regained its position as a driver of global transactions. After a slowdown in the number and value of deals in the first quarter of 2023, volumes are back on the rise, up by more than 42%. Synopsys’ $35 billion acquisition of rival Ansys is undoubtedly one of the most emblematic deals to emerge from this renewed momentum. Despite an uncertain economic climate, Tech behemoths have managed to prove their resilience against a backdrop of controlled inflation.
Regulatory challenges
The recovery is expected to continue in the coming months, with a significant increase in the number of transactions, particularly in the technology sector. For businesses, the regulatory challenges are real and include concerns about competition, privacy and data security. These concerns have been exacerbated by the exponential development of generative AI. In January 2022, Microsoft acquired Activision Blizzard for $68.7 billion. This was a major transaction, requiring the approval of competition authorities in the world’s major economies.
Our experts at your side
In 2024, the macro-economic context is more favourable to the resumption of M&A transactions: the stability of interest rates means that funds are becoming more active again. AURIS Finance works alongside company founders and directors. Our experts are specialised in different sectors and will support you throughout your acquisition or sale transaction. They will also advise you on how to structure your financing and find investors in line with your development objectives.
