3 M&A Trends for 2024 that You Need to Know

The M&A field is constantly evolving, influenced by a variety of factors like economic shifts, technological advancements, and changing global dynamics. As we head into 2024, it’s essential to be aware of what’s in store so that you can plan accordingly.

In this article, we’ll explore three key M&A trends that are likely to be a fundamental part of the landscape in 2024.

But before that, a brief look at what is currently happening in this field.

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Current State of M&A Transactions

2023 was a slow year for M&A, continuing the downward trend that commenced in Q4 of 2022 as companies struggled against soaring interest rates, rising inflation, and geopolitical tensions — among other complications such increased regulatory scrutiny, cautious investor sentiment, and valuation disagreements between buyers and sellers.

Reports show that the volume and value of deal activity declined by 4% and 12% respectively in H1 of 2023, compared to H2 of 2022. The downward trend persisted into the third quarter of 2023, with just $641 billion of deals announced; the lowest third-quarter volume since 2013.

Compounding this situation, the total global M&A deal volume for the first three quarters of 2023 was almost $1 trillion less than that of the same period in 2022 ($2.91 trillion). It was also the lowest three-quarter total since 2013 ($1.77 trillion).

2024 M&A Outlook

However, heading into 2024, there is positive outlook and better economic headwinds..

Some observers, like Claire Ruckin and Swetha Gopinath of Bloomberg, have found signs of M&A market activity picking up. The two report that financing markets are starting to open up for large deals while buyers and sellers are getting more realistic on pricing (thus making it easier for companies to negotiate deals).

Neil Dhar, vice chairman as well as co-head of consulting at PwC, also expects a resurgence of the M&A market in 2024 and beyond. Speaking to Business Insider, he said that during the slowdown of 2023, companies have built massive chests of capital that they are now ready to deploy.

Emerging M&A Trends for 2024

While we wait to see if global M&A activity will indeed pick up in 2024 as predicted by experts, several key trends are expected to dominate the landscape. Among the most notable ones are cross-border M&A, tech-driven M&A, and sustainable M&A.

Let’s take a closer look at each of these M&A trends.

Cross-border M&A Transactions

These sorts of international deals involve firms that belong to two or more different economies.

They provide a great way for companies to gain access to new customers and markets, create new revenue streams, and ultimately increase shareholder value. These types of transactions are also instrumental in the pursuit of corporate strategies such as diversification, unlocking cost synergies, escaping regulatory uncertainty in local markets, and accessing new technology.

The last couple of decades has seen a steady rise in the number and value of cross-border M&A deals as managing directors, investors and corporations seek and pursue growth opportunities across the globe. In 2022, cross-border M&As reached $1.1 trillion, accounting for 32% of global M&A.

Not surprisingly, these deals took a nosedive in 2023, as with the rest of the M&A landscape. In fact, in the first half of 2023, global cross-border M&A was down 17% compared to the same period the previous year, with analysts assigning blame to events like the war in Ukraine, geopolitical tensions between China and the West, and tighter regulatory oversight of foreign investments.

While some of these challenges are expected to persist in the near future, there’s a prevailing sense of optimism regarding the cross-border M&A landscape, with analysts actually anticipating a resurgence of international deals in 2024.

Some posit that the current volatile market conditions could provide an opportunity for firms to acquire high-quality international assets at bargain prices, particularly in the mid-cap and small-cap markets.

Additionally, at a time when both consumers and corporations are reducing spending due to inflationary pressures and high-interest rates, dealmakers see cross-border M&A as an effective tool for lowering overheads and finding cost synergies.

Technology-driven M&A

Technology has been a key part of the M&A landscape for several decades now. 2024 is expected to be no different, and in fact, we could see technology acquire an even more prominent role in M&A.

Numerous factors are expected to continue driving activity in this sector.

One is heightened interest in tech assets that facilitate participation in the metaverse. The metaverse, a virtual universe where individuals interact, work, and socialize in a digital environment, has gained considerable traction in recent times.

Companies across various sectors are recognizing its potential as a new frontier for business growth and engagement.

As a result, managing directors of companies are actively looking for strategic acquisitions or mergers with others that can provide them with the technological capabilities to enter and thrive in the metaverse. This includes companies with expertise in emerging technologies like virtual reality, artificial intelligence (AI), and blockchain technologies.

Another driving force behind technology-driven M&A in 2024 is increased interest in accessing tech talent across borders. In today’s fiercely competitive market, tech talent has evolved into a prized resource.

More and more companies are seeking to expand their talent pool by acquiring tech-focused companies from across the globe or establishing strategic partnerships with them. This approach helps them tap into diverse talent pools, access specialized skills, and ultimately stay at the forefront of innovation.

What’s more, as the tech landscape continues to evolve at a rapid pace, companies are also leveraging M&A as a means to secure intellectual property, proprietary technologies, and patents. These assets can provide a significant competitive advantage by fostering innovation as well safeguarding against potential disruptions by competitors in the market.

Sustainable M&A

Gone are the days when sustainability was merely a buzzword or a secondary concern for corporations and investors. Today, it’s a fundamental consideration across a variety of business activities and transactions, including M&A.

Indeed, in 2024, companies are expected to continue incorporating environmental, social and governance (ESG) considerations into their due diligence when evaluating potential targets.

In a survey by Mergermarket involving senior executives from PE firms, corporate development teams, and investment banks, 96% said they expect ESG scrutiny in deals to rise in the next three years with 48% actually saying they expect it to increase ‘significantly’.

What’s more, all but 2% of the survey’s respondents mentioned that they had turned down one or more deals because of ESG concerns in the previous year.

According to experts, one of the main reasons for the increased emphasis on sustainability or ESG is a growing realization among corporations that a strong ESG is a big driver of long-term value creation.

Shareholder activism has also become an increasingly significant factor in this. Activist shareholders often seek to drive changes in a company’s strategy, including its approach to mergers and acquisitions. They may push for or against specific deals, advocate for changes in the terms of a deal, or call for a company to explore M&A opportunities as a means of maximizing shareholder value.

Conclusion

In this article, we’ve looked at three key M&A trends poised to take center stage in 2024. However, it’s worth noting that these are not the only trends we can expect. Given the hugely dynamic nature of M&A, we are likely to see even more.

All these M&A trends promise both opportunities and challenges. The best way to position yourself for success is to stay informed, adaptable, and proactive.

As you prepare to navigate the M&A landscape in 2024, we also encourage you to explore tools like CapLinked. CapLinked’s cutting-edge virtual data rooms (VDRs), are designed to streamline due diligence, foster efficient collaboration, and ensure sensitive information remains secure throughout the entire M&A process.

Sign up for a free trial today to see how CapLinked can empower your M&A endeavors and help you seize the opportunities that lie ahead in 2024.

Sean LaPointe is an expert freelance writer with experience in personal and business finance. He has written for several well-known brands and publications, including The Motley Fool and Angi/HomeAdvisor.