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Is it finally time to say M&A is officially back?
EY’s latest monthly M&A report found that in August, the total value of large deals (worth $100+ million) reaching $1.1 trillion, a 26% YoY jump. This was thanks in part to a 44% YoY increase in deal value last month, to $137 billion, according to the report.
Deal volume increased more modestly compared to value in August. The 115 deals last month marked a 5% increase YoY. Through the first eight months of 2024, deal volume was up 23% compared with the same period last year. EY now estimates M&A volume will finish 21% higher in 2024 than in 2023, a slight increase from the 20% spike it predicted a few months ago.
According to the EY report, “the surge highlights the confidence in the market across sectors to make strategic acquisitions. The sustained growth in larger deal values suggest that companies are capitalizing on certain valuations and opportunities for consolidation.”
Sectors driving deal activity include technology, energy, and life sciences, which are “buoyed by trends in digital transformation, sustainability, and healthcare innovation.” For instance, the technology sector has seen 256 deals totaling $258 billion in value through August, representing YoY increases of 43% and 65%, respectively.
According to EY, the M&A market could see a setback in the remainder of the year from geopolitical tensions; upcoming elections; “potential policy missteps” by the Federal Reserve, which is expected to cut rates when it meets this week; or an “unseen systemic shock” such as bank collapses or the commercial real estate market tanking.
Even amid these challenges, the resilient US economy “suggests a positive medium-to-long-term outlook, with the potential for a strong rebound in M&A activity later this year,” the report concluded.