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PwC’s US Deals 2024 midyear outlook highlighted that the Business Confidence Index was approaching levels typically associated with increased M&A activity. The economy has cooled in the months since we published that outlook. But rising corporate profits and other metrics that can foreshadow M&A activity have provided optimism that an M&A recovery will continue. Earnings per share (EPS) growth expectations have risen over the past year and appear set to continue on an upward trajectory.
The M&A market has been in an uneven recovery over the past year. Deal volume rose slightly every quarter from the third quarter of 2023 (2,857 deals) to the second quarter of 2024 (3,149 deals) before dropping 2% to 3,085 in the most recent quarter. However, total deal value* increased 6.1%, reaching $346 billion in the third quarter, up from $326 billion in the second quarter. One factor driving the higher value is the surge in large deals this year. By the end of the third quarter, the number of annualized $1 billion-plus deals was projected to reach the third highest level in the past decade. Overall, we anticipate that corporate-sponsored M&A volume will again rebound as companies aim to augment their slowing organic growth rates and boost productivity through scale.
Other factors that influence optimism around a near-term recovery in M&A include:
We believe the economy is still on track for a soft landing, reinforcing the optimism for a continuing M&A recovery. In this environment, dealmakers should evaluate their business portfolios to identify core and non-core assets. Considering divestitures of non-core businesses can streamline operations and free up resources. Simultaneously, M&A leaders should proactively identify potential acquisition targets that align with their core strategies to capitalize on improving economic conditions.
* (Note: Deal value is only disclosed in about a third of deals.)
This update is part of a series offering insights on the four M&A trends PwC identified in the US Deals 2024 midyear outlook.
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