The volume of mergers and acquisitions (M&A) is expected to increase by 20% this year, after having dropped by 17% last year. This increase is almost double the 12% growth predicted in a similar survey conducted in January. This suggests that M&A activity is getting back to levels close to those seen before the pandemic, with the number of deals in 2024 predicted to be just about 4% less than the average number of deals from 2017 to 2019, according to the EY-Parthenon Deal Barometer report.
Through April, the total value of deals has gone up by 69% compared to the same period last year, and the number of deals has increased by 22% for transactions worth more than $100 million. The volume of private equity deals is expected to rise by 16% this year, after having fallen by 15% last year. This is higher than the 13% increase predicted in January. Even though this will still be below the peak levels of 2021, it shows a faster growth rate than the average annual growth of 9% from 2010 to 2019.
From January to April, there have been 429 large deals (over $100 million) in the U.S., totaling $657 billion. The technology sector had the most deals, with 113 deals worth $154 billion, followed by life sciences with 72 deals totaling $96 billion, and energy with 64 deals worth $152 billion.
Peter Orszag, CEO of M&A advisory and asset management firm Lazard, noted that M&A activity is rebounding after a very bad year and that private equity deals are starting to improve. He mentioned that companies are getting back into the market and that private equity firms are beginning to follow. This trend is expected to speed up, especially if the Federal Reserve decides to cut interest rates.
Orszag, who previously served as the director of the US Office of Management and Budget, pointed out that the focus of US regulatory agencies on antitrust issues, particularly a new task force from the Department of Justice aimed at the healthcare sector, could be problematic. He argued that targeting vertical integration in healthcare might not be the best focus since evidence suggests it can lead to efficiencies in the sector.
Key Points
M&A Volume Forecast:
- Expected to rise by 20% this year.
- Last year saw a 17% decrease.
- This year’s forecast is nearly double the 12% predicted in January.
Comparison to Pre-Pandemic Levels:
- 2024’s deal numbers are expected to be only 4% lower than the average from 2017-2019.
- Indicates a return to near pre-pandemic activity levels.
Increase in Deal Value and Volume:
- Through April, deal values have increased by 69% year-over-year.
- Deal volumes have increased by 22% year-over-year for transactions over $100 million.
Private Equity Deals:
- Forecast to rise by 16% this year.
- Last year saw a 15% decrease.
- This year’s forecast is higher than the 13% predicted in January.
- Growth rate is faster than the 9% annual pace from 2010 to 2019, but still below the 2021 peak.
Sector-Specific Deal Information:
- 429 large deals (over $100 million) in the U.S. from January to April, totaling $657 billion.
- Technology: 113 deals, $154 billion.
- Life Sciences: 72 deals, $96 billion.
- Energy: 64 deals, $152 billion.
Insights from Peter Orszag:
- M&A activity is picking up after a poor year.
- Private equity deals are starting to improve.
- Companies are getting back into the market, with private equity firms following.
- Growth is expected to accelerate if the Federal Reserve cuts interest rates.
Regulatory Concerns:
- US regulatory focus on antitrust issues, particularly in healthcare, could be problematic.
- New DOJ task force is targeting vertical integration in healthcare.
- Orszag argues that vertical integration can lead to efficiencies in healthcare, suggesting the focus might be misplaced.
M&A
Summary
