Can M&A Bounce Back in 2024? Second Half of 2024 Points to a Mixed Recovery for M&A

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Jul 09, 2024, 00:01 ET

BCG's New M&A Sentiment Index Indicates a Stable Global M&A Market Over the Next Six Months
Based on Market Indicators and GenAI-Backed Analysis of Executive and Investor Sentiment, the Index Will Provide Monthly Insights into Where the M&A Market Is Headed
Current Momentum Is Strongest in Europe; Dealmakers in the Americas Appear More Cautious After a Strong Turn of the Year; Dealmakers in Asia-Pacific Seem Reluctant to Pursue Transactions, as M&A Activity in the Region Hits a Decade Low
Across Sectors, Energy Is the Bright Spot for the Remainder of 2024

BOSTON, July 9, 2024 /PRNewswire/ -- The M&A market has been slightly more active in the first half of 2024 than in the first six months of 2023, but its recovery from last year's trough has been slower than many anticipated. The global value of M&A activity in the first half of 2024 was $1.0 trillion, well below the ten-year average of $1.5 trillion, according to a new article from Boston Consulting Group (BCG). What's more, BCG's newly launched M&A Sentiment Index reveals that momentum is not yet accelerating in all industries and sectors—though dealmakers appear to be more optimistic now than during the previous 24 months.

The M&A Sentiment Index, which provides a monthly update on dealmakers' willingness to engage in mergers, acquisitions, and divestitures over roughly the next six months, indicates a mixed outlook for dealmaking activity through the end of 2024. Although the current index value of 78 is below the ten-year average of 100, the M&A market has already recovered significantly from the low point of 62 in November 2023. Regionally, momentum is strongest in Europe; by sector, energy, materials, and technology, media, and telecommunications are standouts. However, some dealmakers, especially in Asia-Pacific and in the industrials sector, seem reluctant to pursue transactions.

"M&A has become part of every CEO's strategy toolkit," said Jens Kengelbach, BCG's global leader of M&A. "Yet amid economic uncertainty, concerns about inflation and monetary policy, and regulatory and geopolitical headwinds, it's harder than ever for decision makers to formulate reliable plans."

M&A Momentum Is Strongest in Europe; Asia-Pacific Hits a Decade Low

The regional differences during the first six months of 2024 were significant:

Americas. Deals involving a target in the Americas had a total value of $647 billion, an increase of approximately 14% versus the first half of 2023. Notably, North America accounted for 61% of overall global M&A activity.
Europe. The value of European M&A totaled $255 billion, a 23% increase compared with the first six months of last year. Deal value in the UK increased by 185%—the country's highest share of European dealmaking since 2015. Deal value also increased in Sweden (138%), Spain (19%), and the Czech Republic (196%), while France (–25%) and Germany (–32%) saw declines.
Asia-Pacific. Deal value in Asia-Pacific declined by 40% to an 11-year low of $117 billion. The regional total reflects declines in Japan (–67%), China (–36%), South Korea (–16%), and Australia (–39%). Brighter spots include India (55%), Singapore (41%), and Malaysia (266%).

Drivers for the Remainder of 2024

Many of the trends outlined in BCG's 2023 M&A Report continue to provide support for a positive outlook for deal activity.

The race to gain access to AI and other emerging technologies will likely motivate many transactions in the coming years. In addition, ESG, decarbonization, and the broader energy transition will lead companies to acquire capabilities, technologies, and other assets that advance their goals.

The recovery of valuation levels in most sectors presents another significant tailwind, making it easier for buyers and sellers to agree on a purchase price. At the same time, volatility has decreased, yielding a more stable backdrop for decision making.

Introducing BCG's M&A Sentiment Index

The M&A Sentiment Index uses a proprietary methodology to derive M&A Sentiment Index value, applying BCG's decades of M&A research and expertise, as well as insights derived from analysis of more than 900,000 deals.

To determine the index value each month, BCG will analyze the fundamental drivers of M&A activity—such as business confidence, valuation levels, and interest rates—and apply state-of-the-art generative AI capabilities to assess executive and investor sentiment toward M&A from corporate communications.

BCG will refresh the index on the fourth Tuesday of each month. The index's interactive features allow dealmakers to view sentiment globally and across individual regions and sectors.

"To understand where the M&A market is heading, CEOs, CFOs, and business leaders need more than a quarterly or semiannual snapshot of past deal activity," said Daniel Friedman, BCG's global leader of Transactions and Integrations. "BCG's monthly M&A Sentiment Index gives leaders crucial visibility into the M&A market's near-term trajectory."

Learn more about the M&A Sentiment Index here:
https://www.bcg.com/collections/publications/m-and-a-sentiment-index

Read BCG's latest insights on the state of the M&A market here:
https://www.bcg.com/publications/2024/m-and-a-market-insights-series-h1-2024

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SOURCE Boston Consulting Group (BCG)