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Mergermarket's 2024 Global M&A Report: A Cautious Recovery

In a recent report by Mergermarket, an ION Analytics service, a cautious recovery in the global mergers and acquisitions (M&A) landscape has been observed, indicating potential optimism as we head into 2025. The report's key findings reveal that M&A volume reached an impressive USD 3.4 trillion in 2024, marking an 8% increase from the previous year's lows. Although the market continues to navigate a subdued economic atmosphere, early signs suggest more robust activity could be on the horizon.

Key Drivers of Recovery

The 2024 M&A market was significantly influenced by multiple factors, including a series of central banks in the US and Europe making the strategic decision to cut interest rates. This monetary easing, alongside a year that saw numerous pivotal elections conclude worldwide, has revitalized confidence among dealmakers. Some factors driving expectations for heightened activity in 2025 include:

• - The return of Donald Trump to the presidency and his party's control of Congress, leading to predictions of a surge in American deal-making.
• - Anticipation surrounding promises of lower corporate tax proposals and deregulation, which could unlock previously stalled transactions hindered by antitrust concerns during the Biden administration.

Market Analysis

Mergermarket's report indicates that North America comprised half of the global M&A activity in 2024, followed by Europe, the Middle East, and Africa (EMEA) at 25%, and the Asia-Pacific region at 22%. Within Asia, Japan and Australasia have emerged as key hotspots for transactions. Notably, larger deals also observed a resurgence, with the number of transactions exceeding USD 2 billion rising 20% year-on-year. While mega deals of USD 10 billion and above slightly increased, they still faced headwinds from varying market conditions and scrutiny among dealmakers.

Despite the positive indicators, the landscape wasn't without its challenges. A persistent valuation gap between buyers and sellers remained a significant hurdle, particularly hampering smaller and mid-cap activities. This gap highlighted that while financial conditions improved, misalignments in perceived value continued to obstruct a broader recovery in transaction volumes.

Sector Insights

The technology sector continued to lead the M&A charge, accounting for 19% of global deal volume, a slight improvement over the previous year. Healthcare followed closely with 10%, while finance rounded out the top three sectors at 9%. The commitment from corporate buyers remained robust, driving many of the top transactions and indicating a preference away from financial sponsors in favor of strategic acquirers.

Future Considerations

Lucinda Guthrie, Head of Mergermarket, emphasizes that 2024 represents a noteworthy rebound year for global M&A, primarily fuelled by large-cap transactions amidst favorable financing conditions. However, she cautions that geopolitical uncertainties, valuation differences, and shifting economic policies still pose challenges that will require careful navigation. As we look towards 2025, the outlook is one of cautious optimism, anchored by improved boardroom confidence and a rising appetite for strategic acquisitions, particularly in the technology and healthcare sectors.

In conclusion, while 2024 provided a glimpse of recovery in the M&A landscape, ongoing evaluations of market conditions and strategic alignments will play crucial roles in determining the pace and volume of transactions as we progress into the next year.