KPMG M&A Survey Points to Come Back For M&A In 2024

Also shows 92% using or planning to use GenAI in M&A processes

December 18, 2023 – A recently completed survey of 200 big corporate and private equity M&A decision makers shows optimism that dealmaking will make a come back in 2024. The survey found two-thirds expect more dealmaking in 2024 than 2023, with most saying they will do their next deal in the first half of 2024 rather than wait until later in the year. More than 70% said they are actively working on a deal now, giving further weight to the anticipation of early 2024 activity.   

Carole Streicher, Head of Deal Advisory & Strategy for KPMG US, said: “These survey findings resonated with me as we have been seeing activity pick up from our clients in the last few months and expect this momentum to continue into 2024, especially now that the Fed has signaled the end of its rate rises and KPMG’s economists are forecasting four quarter-point rate cuts in 2024, starting in the spring.”

Dean Bell, Market Activation Leader for Deal Advisory & Strategy at KPMG US, said: “High rates were the main brake on dealmaking in 2023. However, corporates told us a hypothetical half percent fall in rates would not affect their plans very much, given their focus on growth through acquisition. Today, there is less competition from private equity for valuable assets and they plan to take advantage of it. Private equity buyers were of course more sensitive to rates, and this was borne out in the survey, with 66% indicating they’d need rates to come down to do deals at a level similar to previous peaks."

Per Edin, Innovation Leader for KPMG’s Deal Advisory & Strategy practice, said: “GenAI is already playing a role in dealmaking today and its use will continue to grow in the future. M&A practitioners are either currently using GenAI, or plan to use it in 2024, in their M&A processes, with deal strategy and for deal structuring a key area of focus. We see tremendous opportunity for organizations to scale the use of emerging GenAI capabilities in M&A, particularly in due diligence and target selection, and I expect 2024 will be the year that organizations take GenAI from initial pilots to wide-spread usage across their deal teams.”

Some of the survey’s key findings are:

Current Deal Making & Expectations

  • There is optimism about the 2024 deal making market, where two-thirds (65%) expect it to grow beyond what they are seeing in 2023.

Top Deal Making Barriers

  • High interest rates are limiting potential deals, especially for private equity. Market uncertainty and shifting business valuations are also weighing on deal consideration.  
  • The current market has also put greater pressure on managing risk and performing due diligence to ensure value in deals. 

Different Deal Strategies

  • Corporate seeks deals that will provide long-term value and growth, recession resistance and faster business transformation.
  • Private equity is seeking opportunities to turn around distressed assets and expand into new markets and customer segments.

Different Deal Making Plans

  • Most (80%) private equity deals are expected to be $1 billion or more while less than half (45%) of corporate deals will reach this value. 
  • Corporate plans to move faster with its deals, where over half (54%) are expected to announce in the first half of 2024, compared to a third (33%) of private equity.    

Credit Markets & Tax Policy

  • More (68%) private equity firms are looking to activate their ‘dry powder’ in 2024 through turn around assets, paying higher multiples or seeking alternative assets. 
  • Two-thirds (65%) say they are motivated to make deals before the presidential election, due to the potential of tax policy changes.

Generative AI in M&A 

  • 53% said they are currently using, and 39% said they plan to use GenAI in the M&A process in 2024.
  • 71% said they will use Gen AI for deal structuring and 51% said they’d use it for deal strategy.

To view the full 2024 KPMG M&A Outlook Survey, click here.

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