The deal market in 2024 is likely to see an improvement from the difficulties of 2023. The market for deals in 2023 is likely to experience an improvement from the challenges of 2023.

Deal making is hampered by a number factors. The first reason for the slowdown in M&A activity is largely due to capital shortages. The economic environment has changed as a result of the rising interest rates, making it less attractive to invest in growth through acquisitions and new investments. This is especially relevant for the US which is responsible for a large portion of global deal valuations, with two thirds of the top 100 deals of 2021 either the US company or the target.

The second reason is that increased scrutiny from regulators is limiting M&A. National security, antitrust and other issues are causing the scrutiny of larger deals, and restricting consolidation opportunities. The trend is expected continue until 2024.

Third, the focus of generative AI (GIA) will be driving more M&A to develop capabilities. Businesses that don’t have the skills or time horizon to develop GIA capabilities internally will opt for M&A to acquire them. Finally, the environmental, social and governance agenda is gaining traction among CEOs. They are increasingly looking to boost ESG initiatives by acquiring companies that will help them reach their growth, earnings, and valuation goals.

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