New York, NY – December 12, 2024 – The 2024 M&A market is ending the year much as it began—with anticipation for a break in the buyer-seller logjam. The year has been marked by careful adaption as dealmakers accommodate the new realities of higher interest rates and intense regulatory scrutiny.

Bain & Company predicts overall deal value will reach $3.5 trillion by the end of 2024, up 15% year over year and consistent with mid-2010s levels. Global M&A deal volume is up 7% year over year, reversing a two-year decline.

The narrative varies by category of dealmakers. As interest rates moved slightly lower, private equity and venture capital regained ground, with private equity deal value up 29% and venture capital’s up 30% year over year. Corporate M&A, which is less influenced by small movements in the cost of debt, is on track to end the year 12% above 2023, with steady growth across all regions. Healthy strategic activity in energy & natural resources, industrials, and financial services, and notable growth in retail and telecommunications contributed to these gains. However, technology and healthcare & life sciences, typical M&A strongholds, remain well under historical levels.

“Despite strong balance sheets and a strategic need for M&A in 2024, dealmakers didn’t see the positive momentum they hoped for on interest rates, seller willingness to exit, and regulatory scrutiny that would drive a full recovery this year,” said Suzanne Kumar, executive vice president of Bain & Company’s M&A and Divestitures practice. “The most effective dealmakers did two things well: they adapted quickly to the realities of the market—shifting from traditional approaches to embrace both revenue and cost synergies. And they continued to hone their M&A capabilities as frequent acquirers, focusing on screening, negotiating, and leveraging new tools, such as generative AI, to streamline the process.”

Languishing deals amid historically low valuations

Bain’s survey of more than 300 M&A executives found the primary drag on M&A activity remains the buyer-seller valuation expectations gap. A key contributing factor is the distance between historically low strategic M&A valuations (10.4x EBITDA/EV) and high public market valuations (16.6x for S&P 500).

Rather than face substantial markdowns at exit, private equity and venture capital investors dug in with their portfolios. Private and public companies with the option to hold did, too. So, with less competition and a lack of urgency, some deals simply languished.

Navigating regulatory scrutiny and prolonged close periods

As challenges and litigation extended deal close timelines and impacted close rates in 2024, nearly half (47%) of dealmakers said regulatory concerns impacted the types of deals their company considered this year. In response, many are revising deal strategies and spending more time screening up front, evaluating attractive deals for antitrust concerns early. Some put deals on hold pending the outcome of national elections, hoping for more clarity on the future regulatory environment.

This dynamic created a barbell effect where companies prioritized either small, under-the-radar deals or large deals with huge value creation potential, while deprioritizing midsized deals. In 2024, deals valued at less than $1 billion accounted for 95% of all activity, and the number of those deals grew for the first time in four years. Megadeals—namely, those valued at greater than $5 billion—propped up deal value.

Bain expects changes in US and EU administration, as well as updated guidelines in India and Japan, augur well for more open postures to regulation ahead, but the timing, degree, and scope of any softening will likely be uneven by sector and market.

Adapting strategies to new realities of higher interest rates

In response to persistently high interest rates, strategic acquirers were more selective in their deals, required more concrete value creation, were less willing to pay for long-term top-line growth, and, most dramatically, adjusted to the new M&A value equation by pursuing both revenue and cost synergies in tandem.

In turn, scale deals, those intended to strengthen market leadership and lower cost position through benefits of scale, accounted for 59% of deal value in 2024—the highest proportion since 2015. This reflects a shift toward acquisitions that promised clear, bankable synergies within the first year and is a distinct reversal from the previous trend toward scope M&A—intended to accelerate top-line growth by entering or expanding into faster-growing market segments, or by bringing in new capabilities.

Dealmakers increasingly rely on generative AI to save time and costs

In 2024, early adopters used generative AI for sourcing, screening, and sharpening their overall diligence. Bain’s survey found one in five M&A practitioners has used generative AI for M&A activities this year (up from 16% in 2023). An additional 16% expect to use it in the next twelve months.

These early adopters report generative AI reduces manual effort (mentioned by 79% of users), accelerates timelines (54%), and reduces cost (33%).

Looking ahead to 2025

Bain & Company will be releasing its full 2025 M&A Report in February, including a comprehensive analysis of what to expect from dealmaking in the year ahead; a deep dive on several key industries; and the full results of its M&A Practitioners’ 2025 Outlook Survey—including perspectives on dealmaking from more than 300 M&A practitioners in the US, Australia, Brazil, Canada, France, Germany, India, Italy, Japan, and the UK.

ENDS

Editor’s note: To arrange an interview or for any questions, please contact:

• Katie Ware (New York) — Email: katie.ware@bain.com
• Gary Duncan (London) — Email: gary.duncan@bain.com
• Ann Lee (Singapore) — Email: ann.lee@bain.com

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