Estimated read time: 3-4 minutes

After a stubbornly slow stretch for mergers and acquisitions (M&A) activity, the arrow seems to be pointing back up, according to a new KPMG survey of US dealmakers. 

More than half of respondents expect final deal count to exceed last year, and they are even more bullish about the prospects for 2025. This renewed optimism comes despite some challenging ongoing market conditions that have reduced activity over the last two years: shifting business valuations, aggressive regulators, and macroeconomic pressures such as inflation and interest rates that have put deal-chilling restraints on credit and leverage options.

But two years of dry powder, sustained progress on inflation and borrowing rates, and considerable excitement around transformative technologies like generative AI (GenAI) have corporate and private equity (PE) dealmakers kicking a lot more tires and sharpening their pencils as they anticipate more activity ahead. Here are some of the key insights from our new KPMG M&A deal market study.

GenAI is a top focus for the experts in our survey, but their motivation goes far beyond simply securing a spot on the bandwagon. M&A leaders are renowned for their ability to identify value in both expected and unexpected places, and their ideas on GenAI reflect that.

They also are keeping their analytical eyes on GenAI’s actual on-the-ground results. Case in point: As another new KPMG survey² has shown, GenAI is generating a lot more than hype. An overwhelming majority of senior leaders from that survey say that GenAI is already delivering ROI today—and they are doubling down with plans to invest more and scale faster. 

Perhaps to be expected, then, almost half the dealmakers in our survey are hoping to expand their GenAI firepower through acquisitions, with PE (64 percent) especially focused on this. 

But the unexpected? Dealmakers are increasingly focused on landing GenAI tools and capabilities that can help them optimize their own M&A processes. These run the gamut from scenario analyses that help them identify targets and model outcomes all the way through to real-time reporting tools and automated risk mitigation alerts that enable them to streamline integrations and achieve deal value sooner. Indeed, 44 percent of corporate respondents and 36 percent from PE expect to leverage GenAI in their transaction processes.

As one example, KPMG recently helped our client, HP, introduce new AI/GenAI tools and applications into their M&A operations, empowering their teams with robust new capabilities that are delivering dramatic results. (Check out this M&A made easy through AI video for the details.)

M&A’s high-water mark of 2021 will always be a tough measuring stick. But with some market conditions thawing and dynamic new opportunities on the horizon, dealmakers are getting ready for more action. As they move forward, they are looking for both deals and innovative new ways to streamline the notoriously complex “details” of their transactions to accelerate value creation.

Download the full survey report now for much more about the perspectives of corporate and PE dealmakers, how they are navigating barriers, and the types of deals they are looking for in the near future.

Footnotes:

¹ The sound of silence: Q1’23 M&A trends in financial services

² GenAI 2024 Survey