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It’s a marathon, not a sprint in the M&A world (well, at least we say it is). As such, a little September stumble won’t stand in the market’s way of likely beating out 2023, according to the latest EY “Merger Monthly” report.
According to EY’s analysis of deals valued at $100 million or greater, September deal value and volume were down year over year by 25% and 19%, respectively. The month saw only 23 deals above $1 billion, compared to 33 in August and 38 in July.
EY noted the dip is likely only temporary, “as firms postpone engaging in significant deals ahead of the elections as they seek clearer guidance on future antitrust enforcement and the shifting interest rate environment.”
Mitch Berlin, EY Americas vice chair of strategy and transactions, said in a statement, “Remember that September started with a declining labor market and uncertainty about Fed rate cuts with the election looming, and we’ve since had a 50-basis point cut and strong jobs report.”
For the first nine months of 2024, M&A activity was up 19% YoY both in value and volume, according to the report. This keeps M&A activity in line with EY’s projections for this year to surpass 2023 in both corporate volume (+21%) and private equity (+9%), according to an emailed statement.
EY said it’s optimistic that M&A activity will grow due to “strong corporate profits, stabilizing inflation, and healthier debt markets.” The recent Fed interest rate cut should whet the appetite of both corporate buyers and PE firms, which have “massive pent-up demand,” according to the report.