Key Takeaways
Dealmakers remain cautious amid economic uncertainty, concerns about inflation and monetary policy, and regulatory and geopolitical headwinds.
- BCG’s M&A Sentiment Index indicates a mixed outlook for dealmaking activity through the remainder of 2024, following a moderately active market in the first six months.
- The global value of M&A activity for the first half of 2024 was higher than that for the corresponding period last year but below the ten-year average.
- Factors promoting a positive outlook for M&A include the ongoing push for digitization, the energy transition, and the need to future-proof business models.
Where is the M&A market heading? For the first time, decision makers in corporations, private equity firms, and investment banks have access to a quantified and statistically reliable answer. The source is BCG’s M&A Sentiment Index. This newly launched index provides a monthly update on dealmakers’ willingness to engage in mergers, acquisitions, and divestitures over roughly the next six months. Its interactive features allow dealmakers to view sentiment globally and across individual regions and sectors.
Dealmakers can use the index along with an understanding of the M&A market’s current activity level, deal drivers, and trends. Together, these insights can help them make informed judgments about the market’s trajectory in the near to medium term.
Currently, our M&A Sentiment Index indicates a mixed outlook for dealmaking activity through the remainder of 2024. The current index value of 78 is below the ten-year average of 100, aligning it with moderate M&A activity globally and across many industries. However, the M&A market has gained some momentum, recovering significantly from a low point of 62 in November 2023. M&A sentiment is highest in Europe and in the energy, materials, and technology, media, and telecommunications sectors. However, some dealmakers, especially those in the Asia-Pacific region and the industrials sector, still seem reluctant to pursue transactions. (See “About the M&A Sentiment Index.”)
M&A Activity Was Moderate in the First Half of 2024
The M&A market has been active in 2024, but its rebound from last year’s trough has been slower than many observers anticipated. (See Exhibit 1.) Even as financial conditions have generally improved, dealmakers remain cautious amid economic uncertainty, concerns about inflation and monetary policy, and regulatory and geopolitical headwinds.
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ear to date, the three largest announced deals were:
- Australian BHP Group’s bid for UK-based Anglo American, valued at $36.4 billion, which has since been withdrawn
- Capital One Financial Corporation’s merger with consumer lending services provider Discover Financial Services, valued at $35.3 billion
- Synopsys’s bid for simulation software publisher Ansys, valued at $32.5 billion
Private equity deal activity trended higher during the first six months of 2024, increasing in value by 9% versus the same period last year. Financial sponsors continue to feel pressure to invest their large amounts of dry powder. In contrast, early- and later-stage funding for startups is approximately 50% lower than in 2021, despite the strong enthusiasm for AI startups.
The Factors Promoting a Positive Outlook
Many of the trends outlined in BCG’s 2023 M&A Report continue to promote a positive outlook for deal activity. The ongoing push for digitization—now fueled by the latest developments in AI—remains a primary driver of deals. We expect acquisitions that focus on technological capabilities and solutions to motivate many transactions in the coming years. In addition, ESG, decarbonization, and the broader energy transition will lead companies to acquire capabilities, technologies, and other assets that advance their goals. At the same time, companies will pursue more transformational deals to future-proof their business models, strengthen their resilience, and address capital scarcity.