Global M&A Trends Q3 2024: Key Insights and Emerging Dynamics in TMT
M&A activity continues to slow down in 2024, marking a challenging landscape for investors and corporates alike. The latest Litera Global M&A Activity Report reveals a third consecutive quarter of declining deal counts. Yet value generation remains strong, with $2.2 trillion generated across 24,784 deals year-to-date (YTD). Despite a drop in deal volume, average M&A sizes have exceeded historical norms, signaling a focus on larger, strategic transactions.
Key Trends and Insights
- Regulatory Pressures and Debt Constraints:
Increased antitrust enforcement in the US, UK, and EU and a tighter debt financing environment are creating hurdles for companies looking to expand through acquisitions. Strategic acquisitions in tech, healthcare, and other regulated industries were particularly impacted. Additionally, the high-interest-rate environment has dampened leveraged buyout (LBO) activity, causing both strategic deals and LBOs to fall below pre-pandemic levels. - Sector Bright Spots – TMT on the Rise:
While overall deal activity is down, technology, media, and telecommunications (TMT) sectors are bucking the trend. TMT deals accounted for 17.2% of global M&A value and 14.5% of deal count. The average deal size in TMT has jumped significantly since last year, bolstered by the growth of AI-driven companies and strategic investments in business software. - Shifting Focus to Targets in High-Growth Sectors:
Investors are narrowing their sights on potentially high-growth sectors such as software, healthcare, and commercial products. These industries are seen as resilient, with healthcare and software deals benefiting from the continued integration of AI technologies. - Local Acquisitions Providing Liquidity:
In response to tightening liquidity, investors are prioritizing local over cross-border acquisitions. The report notes a decline in global cross-border M&A activity, with firms focusing on less risky, familiar territories. Meanwhile, special purpose acquisition company (SPAC) exits and take-private deals have hit record lows, further reflecting a cautious approach in the market.
What Lies Ahead?
The M&A landscape remains uncertain but opportunities still remain. Leslie Levinson, Co-Chair of Robinson+Cole’s Transactional Health Group, expects the middle-market transactional space to remain very active across a variety of industry verticals for the remainder of 2024 and into 2025.
As central banks gradually ease monetary policies, we may see a revival in IPO markets, which could open new liquidity channels and stimulate deal activity. Until then, acquirers will likely continue to be selective, focusing on strategic, high-value targets. Levinson noted that buyers are also “being more judicious in the amounts they are willing to pay for most assets and are using other deal-bridging mechanisms like earnouts to mitigate pricing risks while still maintaining competitiveness in active deal processes.”
Unlock More Insights: Download the Full Report
In regards to law firm clients, “being realistic about outcomes, timing to complete, and being prepared and able to respond to due diligence requests with thoughtful and timely updates are more important than ever.” - Les Levinson, Partner, Robinson+Cole
Dive deeper into the latest trends, sector analyses, and expert commentary on what’s driving M&A dynamics this year. Download the full report here to stay ahead of the curve and make informed strategic decisions in this evolving market. To explore how Litera’s solutions can help your firm or organization gain actionable insights from deal management, due diligence, and deal precedents, click here.
