Trends Nov, 2023

2024: A Year of Unprecedented Opportunity in Mergers and Acquisitions



It’s of no surprise that, thanks to persistently high inflation, increasing interest rates and recessionary fears, 2023 won’t be securing a place in history books for record merger and acquisition activity.  acquisition activity. 

To quickly recap on how this year has faired:

According to financial data provider Dealogic global M&A activity in the first half of this year was 40% down on the total recorded for the first half of 2020. 

In the UK, there were only three substantial deals: 

  • EQT’s takeover of Dechra Pharmaceuticals (£4.5bn)
  • Brookfield’s purchase of Network International (£2.2bn) 
  • UnitedHealth’s acquisition of EMIS Healthcare (£1.2bn)

In the US, the market has stablilised and is currently seeing roughly US$200b–US$250b of deals each month, with around 250 deals of more than US$100m in the pipeline. 

While few sectors have been immune to the slowdown, the arrival of revolutionary AI tech has certainly added spice to the bland post pandemic economic landscape. 

A recent Forbes article declared that the FOMO-Driven Generative AI acquisition spree has begun in Silicon Valley. Bearing in mind Britain has been dubbed Europe’s leading destination for AI startups, what does this mean for the UK? 

For now the short-term economic outlook still looks uncertain, so understandably lenders remain cautious of funding new deals. 

Looking at data from E&Y’s CEO pulse survey, they found that M&A appetite had dropped to its lowest since 2014 however, they also found that 89% of CEOs surveyed are planning some form of transaction over the next 12 months with the caveat that there’s been a sharp contraction in intentions to actively pursue acquisitions in this time. There’s a collaborative theme to the areas they highlighted as having the most focus includes joint ventures and strategic alliances. 

Also, in a recent article, UK&I Managing Partner for Strategy and Transactions at E&Y Silvia Rindone said “M&A activity in the UK remained subdued in the second quarter of 2023 as companies continued to contend with low-growth, high-inflation and rising interest rates. However, deals involving UK companies did accelerate after a very slow first quarter, pointing to further strengthening through 2023 and into 2024′ 

She then went on to highlight that ‘as the deals market picks up, we expect to see increasing interest in acquiring UK assets, particularly those in the life sciences and technology sectors, given the UK’s reputation in Europe as a leading destination for AI start-ups.”

It’s important to recognise that while these signs indicate the beginning of a recovery of the M&A sector, they are set against a backdrop where global GDP growth is expected to be 20% lower in 2024 compared to 2019.

However, optimism about a M&A growth in 2024 is not misplaced, as according to the European M&A Outlook 2024 report published by law firm CMS, the UK and Ireland have turned a corner and are expected to enjoy the highest growth in M&A activity in Europe next year. 

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