2024 Global M&A Dealmakers Sentiment Report: Regional Analysis

The 2024 SS&C Intralinks Global M&A Dealmakers Sentiment Report, conducted with Mergermarket, offers insights into the perspectives and strategies of 300 global corporate and private equity (PE) mergers and acquisitions (M&A) professionals, sharing how these senior leaders intend to navigate an uncertain business landscape in the next 12 months.

Despite the challenges faced by the global economy, the report unveils a mostly upbeat sentiment among dealmakers. This optimism underscores M&A's continual resilience and the determination of dealmakers to seize opportunities and execute transactions to achieve inorganic growth and provide value to stakeholders.

Complementing this global overview are four newly released regional reports focusing on Asia Pacific (APAC), Europe, the Middle East and Africa (EMEA), Latin America (LATAM) and North America (NA). Together, they offer a comprehensive outlook on the M&A landscape for 2024.

Read on as we discuss key takeaways from each report and uncover regional dealmakers’ expectations for M&A in the coming year.

North America

The M&A outlook for 2024 in North America hangs in the balance, according to the 2024 SS&C Intralinks Global M&A Dealmakers Sentiment Report. After a muted deal activity in 2023, sentiment in North America’s dealmaking market currently reflects a near-perfect balance between optimists and pessimists. While 39 percent of market participants expect some level of increase in deals, 38 percent anticipate a decrease.

However, there are signs in the early weeks of 2024 that M&A in North America may be on the upswing, with a series of drivers that could provide momentum for the year ahead.

Already, the first quarter of 2024 has seen a series of “techquisitions” in the U.S., including two megadeals involving tech giants Synopsys and Hewlett Packard Enterprises.

It is this push for technological innovation that is set to spur the market into action, according to our survey. As many as one in five North American respondents flag the pursuit of digitalization as a key driver of their own deals over the next 12 months, well ahead of other regions.

However, challenges persist — particularly in terms of transparency and economic uncertainty. For almost a fifth, transparency is the biggest obstacle North American dealmakers expect to come up against in the near term.

Following transparency concerns, 16 percent of North American M&A investors view a challenging economic climate as the primary hurdle facing deal activity over the coming months.

Yet, there are still reasons for optimism. Private equity sponsors, currently sitting on a dry powder keg of USD 2.6 trillion, are likely to return to the market in the next 12 months. Competition for the most innovative digital assets will remain fierce and the environmental, social and corporate governance (ESG) imperative will continue to be a strong driving force for deals. However, all of these are predicated on the economy heading in the right direction — something that is very much out of dealmakers’ hands.

Click here to download the 2024 North America M&A Dealmakers Sentiment Report.

Europe, the Middle East and Africa

Despite suffering the second-largest decrease in regional deal value in 2023 (after Latin America), dealmakers in Europe, the Middle East and Africa (EMEA) remain optimistic about the year ahead.

More than half (55 percent) believe M&A activity in the region will increase, including 20 percent who envisage a significant uplift in deals. This presents a more upbeat outlook than the global average where 50 percent of dealmakers across all regions anticipate an increase and only 13 percent see a significant uplift.

Given the perilous economic climate in the region and continued high inflation rates, it is not surprising that respondents believe that the opportunity for restructuring and turnarounds of distressed targets will be the main driver for M&A in EMEA in the next 12 months — a higher turnout than in any other region.

One fundamental obstacle is tempering the optimism. Aligning with the leading driver, 19 percent of EMEA respondents say the biggest challenge to M&A will be the difficult economic environment. Uncertainty stemming from economic instability can deter potential buyers and sellers, leading to a decrease in deal activity.

Despite the economic uncertainty, our research reveals that the more upbeat sentiment has solid foundations. Alongside the opportunities for distressed deals, EMEA dealmakers envisage the race for technological advancement; the need to adapt to an increasingly strict regulatory environment, particularly in terms of ESG rulings; and the re-emergence of the private equity sector as key drivers for deals in the next 12 months.

However, it is worth noting that the ongoing threat of a prolonged conflict in the Middle East, alongside inflationary impediments, remain a significant risk to M&A in the region.

Click here to download the 2024 EMEA M&A Dealmakers Sentiment Report.

Asia Pacific

The Asia Pacific (APAC) region could be the big winner in the M&A arena in 2024 and beyond. Our research reveals that APAC acquirers are the most bullish of any M&A investors worldwide. Seventy percent anticipate an uptick in activity over the next 12 months, and of these, a notable 25 percent predict a significant increase. This compares with 50 percent globally foreseeing an uptick and only 13 percent expecting a significant surge in volume.

The primary driver of deals over the next 12 months, cited by 25 percent of respondents, is capturing associated business links. Identifying these commercial connections during due diligence and making the most of them in post-acquisition integration will be crucial.

Another catalyst for deals over this period will be the pursuit of digital transformation. Rather than solely relying on internal innovation, companies will increasingly turn to M&A to achieve their technology transformation goals, with 16 percent of APAC dealmakers saying that the pursuit of digitalization will be a major driver for deals.

As technology becomes an increasingly fundamental source of value creation, due diligence will naturally become more complex and expansive. Indeed, nearly one in five APAC respondents (19 percent) say that more complex due diligence will be the greatest M&A challenge over the next year.

However, acquirers in APAC have good reason to be the most optimistic globally. Not only does the region boast an economy outperforming others but it is also buoyed by a rising young consumer-focused demographic; a burgeoning and innovative technology market; and a growing appetite for green energy.

Meanwhile, dealmakers also need to note that APAC is not a homogenous region and, outside the powerhouses of China, India and Japan, other jurisdictions such as Indonesia and Vietnam have become new frontiers for M&A.

These trends are all expected to drive growth in dealmaking in the next 12 months and beyond.

Click here to download the 2024 APAC M&A Dealmakers Sentiment Report.
 

Latin America

Dealmakers in the LATAM region are among the least bullish in the world. Fully 40 percent believe M&A will decrease to some extent this year compared to 33 percent globally. Only two percent expect a significant increase, the lowest reading in this research.

For those looking to do deals, the main motivators of M&A will be the pursuits of capturing cost and operational efficiencies (18 percent) and expanding market share (16 percent).

Restructuring and turnaround opportunities are also expected to bring executives to the negotiating table, with 12 percent seeing this as one of their key dealmaking drivers.

Regarding the challenges to M&A, 20 percent in the region point to lapsed deals, the biggest outlying result versus other geographic markets. Meanwhile, 18 percent of respondents say the inability to raise funds is a pressing challenge to their own dealmaking.

Economically, the region still faces challenges from post-pandemic money tightening policies, lower commodity prices and external factors such as supply-chain disruptions from conflicts in the Middle East and Ukraine.

However, there are several potential bright spots. Inflation is falling across the region and the two largest economies, Brazil and Mexico, are showing relative strength. Recent interest rate cuts have seen the inflation figure in Brazil fall to 4.5 percent and this is likely to have a positive effect on dealmaking.

Meanwhile, in Mexico, the nearshoring trend, which sees U.S. companies bringing production closer to home, should drive dealmaking in the region’s second-largest economy. This trend could also boost activity in Colombia, a country that saw a 125 percent rise in deal value between 2022 (USD 3.5 billion) and 2023 (USD 7.9 billion).

Despite holding the most conservative outlook on forthcoming M&A market activity globally, a mixture of falling interest rates, individual jurisdictional strength and restructuring opportunities could prove to be critical dealmaking catalysts over the coming months.

Click here to download the 2024 LATAM M&A Dealmakers Sentiment Report.