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  • Writer's pictureRealFacts Editorial Team

Merger and Acquisition Activity Rebounding

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Merger and acquisition transactions, often abbreviated as M&As, have surged in 2024 following a notably sluggish 2023. M&A activity in the U.S. has soared by 60% year-to-date, representing a total transaction value exceeding $400 billion. During "Bloomberg Markets: The Close," Anu Aiyengar, Global Head of M&A at JP Morgan, delved into the factors driving the surge in M&A transactions in the first half of this year. Aiyengar has advised on M&A transactions surpassing $40 billion in the past year alone, adding to a career portfolio approaching $1 trillion worth of deals. 

She highlighted three key factors driving the reopening of the M&A market: increased buyer confidence, sellers adopting more realistic valuation expectations, and improved courage in navigating regulatory hurdles. The boost in buyer confidence and the enhanced willingness to navigate regulatory challenges largely stem from the absence of fears regarding near-term rate hikes. In 2023, uncertainties loomed over the future of interest rates, whereas this year, the narrative has shifted towards expectations of rate cuts or, at worst, maintaining the current rate environment. 

Furthermore, in 2023, a significant challenge arose from the substantial disparities between the valuations sellers assigned to their companies and the values perceived by buyers. In 2024, Aiyengar noted that the gap has narrowed, explaining, "There is more realism among sellers, there is more confidence among buyers, and there is more structure in bridging the gap." These factors have each contributed to the 60% surge in M&A activity witnessed in the United States this year.

Aiyengar highlighted that certain sectors are poised to play significant roles in the M&A landscape in the upcoming year. She noted that the healthcare sector has experienced heightened activity recently and is expected to continue that trend. In the past few years, healthcare has been somewhat subdued due to the predominant focus on vaccine development and treatment testing. However, there has been a resurgence in healthcare-related deals. Similarly, in sectors broadly categorized as commodities, such as oil, gas, and mining, there has been noticeable activity and that trend is anticipated to persist. Additionally, infrastructure is expected to remain bustling with deals. 

While each of these sectors could potentially experience improved M&A activity, Aiyengar also pointed out that the tech sector is currently experiencing a downturn. She said,  “Tech is a little down and the regulatory environment continues to be challenging for tech.” Consequently, navigating the M&A market in the tech sector may prove more challenging.

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