2 April, 2024

Q1 2024, global M&A activity reached $1.3 trillion, a 15% increase from Q1 2023.

Setting the Stage: An Overview of Q1 2024 M&A Activities

Dipping our toes into the M&A pool of 2024, we must acknowledge that the landscape is vastly different compared to the pre-pandemic era. It's worth noting that there's a healthy dose of optimism about corporate prospects this year, buoyed by opportunities both novel and complex.

Interestingly, the Americas, undaunted by market uncertainties, contributed to over half of the global M&A activity in 2023. This dominance adds to the upbeat tone for 2024, strengthening the forward momentum.

Last year, the final quarter saw an impressive jump in the value of global M&A activity. It hiked a whopping 41%, hitting the $1 trillion mark. We also noted a trend in Q3, where approximately one-third of the deals were carved out, reaching a total value nearing US$25 billion. These triumphs set the stage for 2024, presenting a tableau of potential for growth and profits.

Private equity and principal investors did throw a bit of a spanner in the works last year by reducing global M&A activity by 37% to $560 billion. While this might initially come across as a damper, it could pave the way for an interesting paradigm shift in the M&A industry. A reduction in activity from these big players could open up more space for a broader range of businesses and investors.

Adding another layer to the M&A narrative are the approximately US$300 billion of leveraged loans maturing between 2024 and 2026. With corporate D-day looming, there's a possibility that this could lead to distressed opportunities in M&A. Think, debt restructurings or bargain hunt acquisitions. This could stir the pot for new strategies or perhaps disturb the current M&A landscape.

As we immerse ourselves in 2024's M&A arena, let's brace for new opportunities, fresh narratives, and exciting shifts in dynamics. An intriguing journey awaits us.

Unraveling the Key Drivers Behind Q1 2024 M&A Transactions

Source: Deloitte

Let's take a closer look at the distinct factors and events that drove M&A transactions in this period.

A key driver was market uncertainty, a remnant of the prior year's conditions. This uncertainty led corporations to reconsider their investment strategies, emphasizing the importance of strategic M&A activity to secure their positions amidst fluctuating market trends.

Another unique feature of Q1 2024 was the maturation of approximately $300 billion worth of leveraged loans. This situation paved the way for considerable distressed opportunities in M&A. It acted as a catalyst for companies wishing to acquire assets at a price lower than their inherent value.

The geographical impact on M&A activity was also noteworthy. The Americas, following their 2023 trend, continued to dominate, accounting for more than half of global M&A activity. This prominence reaffirms the significant role of the region in shaping the global M&A landscape.

m&a trends 2024

Lastly, the quarter displayed a continuing trend from the previous year with one-third of the deals being carve-outs, a sell-off strategy enabling companies to focus on their core business areas.

Consider all these factors as you evaluate looming M&A opportunities, and adjust your strategy accordingly. Understanding these key drivers goes a long way towards being prepared for any twists and turns in the industry.

Most Active Sectors: Where M&A Thrived in Q1 2024

The technology sector led the M&A activity with deals worth $300 billion.

  • The Americas maintained their commanding lead, responsible for over half of the M&A activities in the world. A clear demonstration of their economic vitality even as we move further into 2024.
  • The Global Energy and Materials (GEM) sector maintained a significant share, with 26 percent of the transaction value on a global scale. As demand for energy and raw materials sees continuous growth, the GEM sector continues to be a significant player.
  • Moving on to another champion, the Technology sector. Over the past twelve months, it accounted for nearly one-third of Private Equity (PE) activity by value. With technology weaving itself ever more deeply into all aspects of our lives, this sector's M&A activity remains high.
  • Private Equity (PE) investors, despite accounting for only 18% of deal activity in 2023, are likely to become more noted this year. With market shifts projected and the sector's inherent adaptability, we might just be poised to observe an uptick in PE investment involvement in M&A affairs.
  • Following the year-on-year surge of 41%, global M&A activity value breached the $1 trillion mark in the last quarter of 2023. Despite market uncertainties, the dynamism of M&A's pace signals a robust drive towards consolidation and strategic alliances.
  • Market analysts are optimistic for corporate prospects in 2024. The transformative powers of M&As might come into play more than ever, as both conditions and expectations for M&A in this year are expected to be considerably different from the norm, influenced majorly by the pandemic's aftermath.

Emerging Players: New Entrants in the M&A Field

m&a trends

As the M&A landscape continues to evolve, it's crucial that we take a moment to highlight some of the newly established players that have entered the scene in Q1 of 2024. These fresh participants are not only redefining their respective sectors but are also introducing new strategies that have the potential to shape the future trajectory of M&A activities.

Take note, while the market was riddled with uncertainty due to the global pandemic, these innovative entities survived, adapted, and eventually made their mark by seeking unconventional strategies. Their bold approaches and intelligent risk management have set a new roadmap for the remainder of 2024.

One notable trend that has emerged is the rise of distressed businesses entering the M&A field as active players. Previously categorized as targets for acquisition, these entities utilized M&A solutions to revise their financial positions, bolster cash holdings, and strengthen their balance sheets, turning them into opportunistic actors in the market.

Furthermore, fresh market trends hint towards Private Equity (PE) investors rising from the sidelines and plunging into an ocean of opportunities.

Despite representing only 18% of the total deal activities in 2023, PE investors are projected to stir up the waters, contributing significantly more in the upcoming months. Their newfound vigor can be attributed to the broader array of deal types now available in the current PE market, expanding their engagement horizons.

It's a dynamic and fascinating time in the world of M&A. With these emerging players bringing about diverse strategies and fresh insights, one can only anticipate the intriguing M&A developments that Q2 of 2024 holds in store.

Forecasting Future Trends: What Q1 2024 Tells Us About What's Next

m&a virtual data room

You've got an idea about the groundwork laid in Q1 2024. Now, let's steer our conversation towards the future. Given the current trajectory, what does the remainder of 2024 potentially hold for the M&A industry?

If we take into account that analysts are predicting approximately 5% growth in revenue for 2024, we can foresee some promising times ahead. Yet, as we're all aware, not everything in the business ecosystem is destined to be a bed of roses. We must keep in mind several uncertainties going into the year, such as potential economic volatility, tense geopolitical situations, regulatory scrutiny, disruptions in the global supply chain, and looming elections.

These factors are brewing up a different kind of M&A landscape, one that looks rather different from the pre-pandemic and pandemic periods. As we are adapting to this dynamic environment, it becomes crucial we keep an eye on the transformations taking place in Asia.

Yes, you read correctly, Asia! The region is projected to be home to over 80% of the world's new consumers in 2024—certainly a statistic worth keeping in mind.

When analyzing the M&A trends survey, it is clear that credit conditions in early 2024 have significantly improved from 2023. An increasing trend, you see, is the rise of private credit funds that are stepping up to provide the financing for deals. This positive credit climate undoubtedly paves the way for more corporate deal-making, which accounted for 82% of global deal values in 2023, dominated chiefly by the Americas.

So, is the future looking bright for M&A activity in 2024?

It certainly seems so, given the current outlook. However, remember to stay agile and respond to the evolving business dynamics. After all, the only constant in the world of mergers and acquisitions is change. Brace yourselves and let's journey together into the brave new M&A world of 2024!

Get a demo