The 2024 deal market is likely to witness a revival from the what are bankruptcy and restructuring challenges of 2023. The market for deals in 2023 is likely to experience an increase in activity following the challenges of 2023.
Deal-making will be hindered by a variety of reasons. The first reason for the slowdown in M&A activity is due largely to capital constraints. The economic landscape has changed because of rising interest rates, making it less attractive to invest in growth via acquisitions and new investments. This is particularly true for the US which accounts for a large portion of global deal value with two-thirds of the top 100 deals of 2021 featuring the US firm as either the bidder or as a target.
Second, increased scrutiny by regulators is limiting M&A. Concerns over antitrust, national security and other issues are putting more scrutiny on larger deals and limiting the scope for industry consolidation. The trend is expected to continue until 2024.
Third, the emphasis of generative AI (GIA), will result in more M&A to build capabilities. M&A will be used by companies that lack the time or skills to develop GIA capabilities internally. The environmental social and governance agenda is gaining traction among CEOs. They will increasingly seek to boost ESG initiatives by acquiring companies that can help them reach their earnings, growth and valuation goals.