The deal market in 2024 is likely to recover from the issues that it faced in 2023. Inflation has been slowed, and could even begin to decrease and interest rates have stabilized (though they are unlikely to be back to pre-pandemic levels) Private credit is becoming more accessible for a wider range of deals and traditional equity markets have recovered lost ground, reaching record highs.

Deal making will be hampered by a variety of reasons. The slowdown in M&A is largely due capital restrictions. The economic landscape has changed as a result of rising interest rates, which makes it less attractive to invest in growth via acquisitions and new investment. This is especially relevant for the US as it accounts for an important portion of global deal value, with two-thirds of the top 100 deals of 2021 having the US company either as a bidder or target.

A second issue is that the increased scrutiny of regulatory agencies is limiting M&A. Concerns about antitrust, national security and other factors are putting more scrutiny on larger deals and restricting the possibilities for industry consolidation. The trend is expected to continue through 2024.

Third, the focus of generative AI (GIA), will result in more M&A to build capabilities. Companies that do not have the necessary skills or a time horizon to develop GIA capabilities internally will turn to M&A to acquire them. Additionally, the environmental, social, and governance (ESG) agenda is continuing to gain traction among CEOs. They will increasingly seek to boost ESG initiatives by acquiring companies that will help them reach their growth, earning, and valuation goals.

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