The deal market in 2024 is likely to rebound from the difficulties which were encountered in 2023. Inflation has slowed http://thisdataroom.com/why-choose-virtual-data-room-for-bankruptcy-restructuring and could even be on the verge of declining, interest rates have stabilized (though they may not be back to pre-pandemic levels), private credit is becoming more accessible to finance more types of deals, and traditional equity markets have regained lost ground, and have reached record highs.
However, a variety of factors will continue to hinder the process of making deals. The slowdown in M&A is largely due to capital constraints. The rise in interest rates has altered the economic landscape which has made it less attractive to invest in growth through acquisitions and new investments. This is particularly relevant for the US which accounts for the majority of global deal value, with two-thirds of the top 100 deals in 2021 involving an US company either as a bidder or target.
The second reason is that increased regulatory scrutiny is limiting M&A. Concerns over national security, antitrust and other factors are putting more scrutiny on larger deals and limiting the scope for industry consolidation. The trend is expected to continue through 2024.
Third, the main focus of generative AI (GIA) will lead to more M&A to build capabilities. Companies that do not have the skills or time horizon to develop GIA capabilities internally will opt for M&A to acquire these capabilities. Additionally, the environmental, social and governance (ESG) agenda is continuing to gain traction among CEOs. They are increasingly looking to boost ESG initiatives by purchasing companies that will help them reach their growth, earning, and valuation goals.