US M&A Outlook for 2024

General Overview of M&A in 2023

In 2023, the US M&A landscape faced a significant downturn, as global M&A value dropped notably, similar to the declines not seen since the pandemic year of 2020. However, despite these challenges, the US market displayed resilience, supported by strong economic performance and notable large-scale transactions. The total M&A dollar volume fell to around $3 trillion, a decline but still aligned with the robust activity levels seen in pre-2018.

Strategic Trends and Deal Highlights

The resurgence in the US market is characterized by increased CEO interest in M&A, with over half indicating plans for mergers and acquisitions within the next year. This renewed vigor is notably visible in the technology sector, where advancements such as artificial intelligence are driving strategic acquisitions, and in the energy sector, where rising commodity prices are providing firms with the capital to engage in more transactions.

Private equity plays a pivotal role, with firms adapting to high interest rates and a complex regulatory environment by employing creative financing structures, such as joint ventures and minority investments . Notable transactions include Hewlett Packard Enterprise's $14 billion acquisition of Juniper Networks and significant investments by Blackrock and other major entities, signaling a willingness to pursue larger and more complex deals.

Financing and Regulatory Landscape

The financing environment remains challenging due to persistently high interest rates and macroeconomic uncertainties. However, companies are becoming increasingly creative in their deal structuring to achieve strategic goals despite these financial constraints. Regulatory scrutiny, particularly in technology transactions, continues to influence deal timing and complexity

Sector-Specific Insights

The technology, energy, and pharmaceutical sectors are at the forefront of recovery and growth in the US M&A market. The technology sector, boosted by AI and cybersecurity, is particularly poised for a strong performance in 2024. Meanwhile, energy sector deals are being catalyzed by the current high commodity price environment, and the pharmaceutical sector remains active, driven by the need for innovation and addressing patent cliffs

Conclusion

Overall, the outlook for US M&A in 2024 is marked by cautious optimism. With a strategic emphasis on technology-driven growth and creative deal structuring to navigate financial and regulatory hurdles, the market is poised for a significant rebound. The focus on sectors that leverage technological advancements and economic incentives suggests a year of dynamic growth and transformative potential in the US M&A landscape.