Can mergers and acquisitions bounce back in 2024?

There were over 55,200 deals in 2023, a 6% decrease compared to previous years. European M&A activity declined more than the global average at 28%, while worldwide the decline was 13%. City firms are now optimistic about a recovery in M&A activity driven by private equity and a pursuit of security.

In 2023, sellers faced challenges with pricing, leading to major strategic buyers prioritizing profitability over growth through acquisitions. Big tech companies like Amazon, Alphabet, Apple, and Salesforce made only 4 acquisitions collectively in 2023 compared to 18 in 2022. However, signs of recovery emerged in Q4 of 2023, with the announcement of 10 major deals, raising hopes for increased activity in 2024.

Cybersecurity and AI were the top-valued categories in 2023 and are expected to remain so in 2024. Small transactions are anticipated to recover more quickly in 2024, with strategic and financial buyers becoming more active. Technology will continue to be a favored sector for dealmakers in 2024, representing 27% of deal value.

Healthcare also saw significant deals in 2023, with Pfizer's $43 billion takeover of Seagen and Daiichi Sankyo's $22 billion deal with Merck. Global private equity deals dropped in volume and value in 2023 but are expected to increase in 2024 with a shift in strategy. AI will play a key role in due diligence, streamlining operations, identifying targets, and automating tasks in dealmaking.

Energy and financial services are expected to see increased M&A activity in 2024, driven by a focus on ESG and technology integration. Overall, 2024 promises to be a more active year for M&A transactions across various industries as companies seek growth and innovation through strategic acquisitions.