There are several top M&A trends in 2004, according to advisory firm Gartner.
These top M&A trends in 2024 include unlocking technology M&A opportunities amidst macroeconomic ambiguity; using artificial intelligence (AI) to improve M&A processes; acquiring AI-based businesses; and navigating an increasingly complex regulatory environment.
While global M&A activity is continuing its downward march from record levels in 2021—down 50% from the peak, a renewed focus on technology, particularly AI, provides tailwinds for executives to reenter the M&A market in a big way next year, said Mark Carroll, VP Analyst at Gartner.
The top M&A trends in 2024 identified by the research firm are as follow.
Macroeconomic ambiguity unlocks tech M&A opportunities
Macroeconomic ambiguity will persist in 2024, with mixed positive and negative signals distorting expectations on inflation, recession, employment, cost of capital, and business and consumer confidence.
Previously expensive startup technology companies will struggle to raise their next round of venture funding and will be seeking alternatives, which includes being acquired by strategic buyers. The advisory firm recommends that well capitalised enterprises take advantage of this by pursuing acquisitions of smaller technology focused businesses (techquisitions) with lower valuations and less access to funding than would typically be available in clearer economic conditions.
AI use will improve the M&A process
The use of AI will have a profound impact on improving the speed, efficiency and overall performance of M&A processes.
Gartner recommends applying AI within internal M&A processes first by developing and testing diverse use cases. In particular, contract analytics is an impactful application for using AI right now to improve activities tied to letter of intent (LOI) negotiation, contract due diligence, definitive agreement and TSA negotiation, and contract renewals and integration.
AI strategy to require new approaches and acquiring AI-based businesses
While M&A of AI-based businesses is not trending yet for enterprises, the enterprise focus on this technology will lead to a wave of deal activity in 2024. Gartner recommends the acquisition of AI businesses needs to be forefront in all business strategies in 2024. Those that lack the skills or time horizon to build capabilities on their own can use M&A to gain access to the technology.
Increased regulatory scrutiny to hinder large M&A activities
Regulatory scrutiny of M&A deals, particularly on anti-competition and national security grounds, is increasing and will continue to be a major factor hindering large M&A deals in 2024.
However, this trend raises the appeal of executing a large number of smaller, more industry-diverse M&A deals, which can create a competitive advantage in this environment.
Sharper regulatory scrutiny, which can have a chilling effect on large M&A transactions, can also create a competitive opportunity for enterprises best positioned to complete a higher volume of smaller deals. For those focused on larger deals, it’s important to take a more proactive approach with regulators next year.