CFOs and controllers play a critical role in mergers and acquisitions, and 2024 is poised to be a big year for M&A activity, especially compared to the sharp downturn in activity in 2023. 

In late January 2024, Deloitte released survey results on M&A trends. Based on Deloitte’s findings, financial leaders had better prepare for a flurry of M&A deals in 2024. Join us as we explore the findings of Deloitte’s intriguing survey and provide some practical tips that you can use to prepare for the rise in M&A activity. 

Recapping Last Year’s Decline in Activity 

Globally, merger and acquisition volume and value dropped significantly in 2023. Rising interest rates, financing challenges, and fears of a recession contributed to the sharp decline in M&A activity. 

According to PwC, M&A volumes dropped by 6% last year, and values decreased by 25%. Researchers also found that the number of declines dropped by 20% between the first and second half of 2023. The second-half drop signifies that business leaders’ sentiments worsened as the year progressed. 

Looking Ahead: Deloiitte’s Predictions for 2024

An overwhelming majority of executives (83%) predict an increase in deal volume, while 82% foresee an expansion in the size of their own organization’s deals in the coming year. These positive sentiments are mirrored in their outlook on deal value, with a similar percentage expecting larger transactions. 

These projections are supported by Deloitte’s 4Q23 North American CFO Signals survey, which shows that a significant portion of companies’ growth in the next three years is expected to come from M&A activities. The bottom line is this: merger and acquisition deals are poised for a major resurgence, and CFOs need to be ready.

Deloitte enjoyed a historical high in survey participation. The 2024 survey marks a decade of Deloitte’s insights into M&A trends, boasting the largest cohorts of respondents yet. In total, 1,500 U.S.-based executives from both corporations and private equity firms participated. As such, the survey offers a comprehensive view of the evolving dynamics in the deal-making landscape. 

Emphasis on Internal Transformation

The findings underscore a concerted effort by corporations and PE firms to lay a solid foundation for growth through internal transformations. Post-pandemic restructuring efforts have been widespread, with 68% of leaders indicating that their companies have undergone significant changes since early 2020. Focusing on internal readiness positions companies to capitalize on M&A opportunities more effectively. 

How Firms Have Adapted to New Challenges

The past year witnessed a slower M&A market, prompting firms to adapt by exploring alternative financing options and embracing non-traditional deal structures, such as joint ventures and strategic partnerships. These changes underscore the resilience and innovation within the sector, enabling companies to navigate through fluctuating market conditions.

Interest in cross-border transactions has surged, too. According to the Deloitte survey, there has been a 22% increase in international targeting over the past two years. This expansion highlights the global nature of modern M&A strategies as companies seek to tap into new markets and diversify their portfolios. 

If your organization wants to throw its hat back into the M&A ring in 2024, you’ll need to reevaluate how you approach deals. Non-traditional deal structures can alleviate the negative impacts of high interest rates and allow you to spread the burden of M&A activity while still tapping into the benefits of a merger or acquisition. 

AI and Goal Alignment

There are two things that your company needs to do to prepare for the looming uptick in M&A activity. First, ensure that your company has a coherent M&A strategy that aligns short-term growth goals with broader enterprise objectives. The emphasis on strategic alignment and deal valuation reflects a mature, more risk-averse approach to mergers and acquisitions.

Secondly, you’ll need to double down on artificial intelligence and analytics investments. By combining advanced analytics technology with AI, you can enhance M&A processes, accelerate pre-deal pipelines, and conduct more thorough due diligence. These technologies also play a crucial role in other M&A processes, including deal identification, valuation, and integration. 

Many Deloitte survey respondents realize the value of advanced analytics and AI in mergers and acquisitions. In fact, 99% of respondents stated that their businesses have already begun using generative AI and data analytics technologies to enhance M&A lifecycle tasks. To keep pace, you’ll need to adopt a similar strategy in 2024.

What’s Next for Your M&A Strategy

The insights from the Deloitte 2024 M&A Trends Survey paint an optimistic picture for the future of M&A activity, highlighting a strategic shift toward more informed, technology-driven, and globally-oriented deal-making. As you navigate the changing landscape, make sure to prioritize strategic alignment and technological innovation, as they will be key drivers of success in the 2024 market.

Additional Resources

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