Global M&A deal value on track to reach $3.5 trillion in 2024

2024 will go down into the history books as a good year for M&A advisors, with both deal volume and value ending the year higher than the year previous. That is according to research from Bain & Company.

The global management consulting firm predicts that overall deal value will reach $3.5 trillion by the end of 2024, up 15% year over year and consistent with mid-2010s levels. Global M&A deal volume is up 7% year over year, reversing a two-year decline.

The rise in dealmaking activity was lifted by both strategic buyers (companies) as well as financial sponsors (such as private equity firms and family offices), with similar patterns of growth noted across all regions. From a sector perspective, activity in energy & natural resources, industrials and financial services were the most active sectors, followed by healthcare and pharmaceuticals.

The technology sector, typically an M&A stronghold, remain well under its historical levels, ending the year at $287 billion, well below its seven-year average between 2015 and 2022.

Bain & Company said in its report that the number of deals closed could have been higher had there not been a such a high valuation expectations gap between buyers and sellers. The firm found that an average valuation by sellers stands at a multiple of 10.4 times, which buyers think is on the high side.

“With buyers still sceptical on price and sellers reluctant to move too soon, some deals simply languished,” said Suzanne Kumar, a leader in Bain & Company’s M&A & Divestitures practice.

What’s more, Bain & Company said that dropping interest rates did not trigger the full recovery which had been expected by some at the start of this year, pointing at the highs of $3.7 billion and $6.1 billion in deal value realized in 2022 and 2021 respectively. “Despite strong balance sheets and a strategic need for M&A in 2024, dealmakers didn’t see the positive momentum they hoped for.”

In response to high interest rates and high valuations, buyers were more selective in their deals, less willing to pay for long-term top-line growth, and, most dramatically, adjusted to the new M&A value equation by pursuing both revenue and cost synergies in tandem.

“The most effective dealmakers did two things well in 2024: they adapted quickly to the realities of the market – shifting from traditional approaches to embrace both revenue and cost synergies. And they continued to hone their M&A capabilities as frequent acquirers, focusing on screening, negotiating, and leveraging new tools, such as generative AI, to streamline the process,” said Kumar.