Deal volumes down but advisory firms fervid

M&A activity has remained slow through most of 2023, but various catalysts have the potential to start encouraging dealmakers to come off the sidelines.

As S&P Global reports in its recently released See the Big Picture: 2024 M&A Outlook, the extremely small number of transactions in 2023 will make year-over-year M&A comparisons in 2024 easy to surpass.

So far this year, there have been 33,457 M&A deals, down from the 51,709 transactions executed in 2022. Last year, dealmaking was also down from the 60,416 transactions inked in 2021, the highest number over the past 5 years.

S&P Global notes potential stability in rates, pent-up demand, and pushes to consolidate or divest in certain industries could drive an uptick in M&A activity looking ahead.

“Greater clarity in the economic outlook and the end of the rate-hiking cycle would foster more M&A growth, while antitrust scrutiny remains a potential barrier,” S&P Global reports.

“M&A activity is not expected to skyrocket anytime soon, but it should start to pick up

“M&A activity is not expected to skyrocket anytime soon, but it should start to pick up. The extremely small number of transactions in 2023 will make year-over-year comps in 2024 easy to surpass. Large deals will continue to face hurdles, especially in the US where antitrust concerns have been a focus of regulators.

Still, an end to central banks’ rate-hiking cycles, along with greater economic clarity, would lead to more transactions.”

“M&A remains a growth engine for most enterprises, so next year will see success increasingly depend on how executives pivot to handle these market trends,” says Chris Ganly, VP Team Manager at Gartner.

Gartner (NYSE: IT), which is a US tech research and consulting firm, says M&A trends for 2024 include unlocking technology deal opportunities amid macroeconomic ambiguity; using artificial intelligence (AI) to improve M&A processes; acquiring AI-based businesses; and navigating an increasingly complex regulatory environment.

One sector poised to help drive deal growth is electric vehicle infrastructure M&A, as reported by Mining.com.au.

In a recent report, a global survey by DLA Piper, supported by Infralogic, forecasts over the next 5 years the total value of EV infrastructure deals worldwide is set to surge to US$57.4 billion. DLA Piper notes there have been 104 EV infrastructure deals in 2023 compared to just 9 such transactions in 2019.

However, having endured a tough year for dealmaking more broadly, advisors remain optimistic if not fervid of transaction activity in the year ahead in a range of markets.

“We’re relatively optimistic about the outlook for 2024, as deal activity shows promising signs of recovery,” says Jens Kengelbach, Boston Consulting Group of M&A.

Morgan Stanley also sees a recovery of M&A activity next year and is optimistic 2024 should be meaningfully improved compared to last year amid a sustainable recovery.

Moves and mandates

Should the forecasts come true, advisory firms will certainly be jostling for mandates.

Who are the main players and which firms have been topping deal league tables?

GlobalData Automotive Intelligence Center reports that the top-ranked financial advisors for the aforementioned EV-related deals in Q3 2023 were Rothschild, Benchmark Investments, Cavendish Financial, Clairfield International, and Greenhill.

The top-ranking legal advisors supporting these M&A transactions were Baker & McKenzie, Allen & Overy, and Cleary Gottlieb.

Domestically, Allens was again recognised as Australia’s leading M&A and private equity advisor, having topped Bloomberg’s M&A Legal League Tables for H1 2023 both in Australia and overseas.

Allens was ranked first by deal volume in Asia-Pacific (ex-Japan), by deal volume in Australia and New Zealand, and first by volume in Southeast Asia, as well as taking 10th spot for cross border announced deals by volume.

Meanwhile, Goldman Sachs and Houlihan Lokey emerged as the top M&A financial advisors by value and volume for H1 2023 on the latest Financial Advisors League Table by GlobalData. The league table ranks advisors by the respective value and volume of M&A deals on which they advised.

Based on its financial deals database, the data and analytics company report Goldman Sachs achieved its leading position in the deal value rankings by advising on US$209.3 billion worth of deals.

JP Morgan occupied second position in terms of value, by advising on US$190.5 billion worth of deals, followed by Bank of America with US$186.3 billion, Centerview Partners with US$133.8 billion, and Morgan Stanley with US$121.3 billion.

An analysis of GlobalData’s Financial Deals Database reveals Houlihan Lokey led by volume by advising on a total of 128 deals. Rothschild & Co occupied the second position in terms of volume by advising on 123 deals, followed by PwC with 90 deals, JP Morgan with 85 deals, and KPMG with 83 deals.

Kirkland & Ellis emerged as the top M&A legal advisor for H1 2023 in terms of both value and volume on the latest, according to GlobalData.

Write to Adam Orlando at Mining.com.au

Images: iStock & S&P Global
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Written By Adam Orlando
Mining.com.au Managing Editor Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Adam has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.