2024 KPMG Mid-Year M&A Survey Indicates Expected Ramp Up of M&A in Second Half of 2024 and Into 2025

August 14, 2024 – KPMG’s mid-year mergers and acquisitions (M&A) pulse survey of 200 large corporate and private equity M&A decision makers shows optimism for the deal market, with dealmakers expecting a ramp up of M&A volumes in the second half of 2024 and into 2025. Dealmakers said elevated interest rates and mismatched buyer/seller valuation expectations were the main factors holding back deals so far this year. At the same time, they reported that a half percent fall in interest rates would be sufficient to stimulate dealmaking for them to the same level as that seen in the last peak of the M&A cycle.  

Some of the survey’s key findings are:

• 57% of dealmakers expect their next deal will happen this year versus 41% saying their next deal will happen in 2025.
• Most dealmakers expect the number of deals they do to keep increasing, with 54% saying 2024 will outpace 2023 activity and 57% saying 2025 will outpace 2024 activity.
• Private equity is far more bullish than corporate about its dealmaking expectations, with 84% saying 2025 will be busier than 2024 and 70% saying 2024 will be busier than 2023.
• Shifting business valuations (59%) and elevated interest rates (58%) were the top impediments to doing a deal right now, but overall concern over these has dropped from 2023, suggesting an acceptance of a new normal for dealmaking.
• Anti-trust regulation is a much bigger issues for private equity (60%) than corporates (39%), and credit issues or leverage constraints (33%) ranked as the lowest impediment to dealmaking.
• A majority (64%) of dealmakers said a rate decrease of only a quarter (25%) or half a percent (39%) would be sufficient to stimulate M&A to the same level seen in the last peak of the M&A cycle.
• Two thirds of dealmakers say geopolitics has affected their dealmaking, with 28% saying it will increase their M&A volume and 22% saying it will bring forward their dealmaking.
• 80% of dealmakers said GenAI has had some impact on their deals, with nearly half saying their strategy involves buying GenAI technology or products.

Carole Streicher, Head of Deal Advisory & Strategy for KPMG US, said: "I'm optimistic about the deal market for the rest of 2024 and into 2025. We’ve already seen dealmakers get comfortable with the “new normal” of elevated interest rates and consistent uncertainty; but when that new normal tips to the more positive, there’s a potential for activity to take off. I think we will see a return to activity driven by strategic imperatives, technological disruption and competitive pressures. GenAI is a game-changer for many industries, and it will create new opportunities and challenges for dealmakers."

Dean Bell, Market Activation Leader for Deal Advisory & Strategy at KPMG US, said: “With KPMG’s economists now forecasting quarter-point rate cuts in September and December, this bodes very well for a strong M&A market as we head into the backend of 2024 and into 2025.”

On the GenAI findings, Bell said: "GenAI is not just a buzzword, it's a reality that dealmakers need to embrace and understand. GenAI can help them identify new sources of value, optimize their deal processes, and enhance their decision making. But it also poses significant risks, such as regulatory scrutiny, ethical dilemmas, and cyber threats. Dealmakers who can leverage GenAI effectively and responsibly will have a competitive edge in the M&A market."

Glenn Mincey, U.S. Head of Private Equity at KPMG, said: “PE firms are sitting on record amounts of dry powder that they will need to deploy, but perhaps more importantly, PE firms have held a surplus of assets for longer than anticipated and many will need to sell those assets soon to fund returns to their investors. If they don’t start selling these assets soon, they may have to face a forced-sale environment.”

To read KPMG’s full 2024 Half Year M&A Pulse Survey, click here.

# # #

Media Contact

For media inquiries, please contact Ed Jones at edwardjones@kpmg.com.