Larger M&A deals doubled in the first quarter of 2024

Larger M&A deals doubled in the first quarter of 2024

As reported by the Financial Times, larger merger and acquisitions (M&A) deals have more than doubled in the first quarter of 2024, which signals an uptick in the M&A market following a lengthy downturn. 

The number of transactions worth at least $10 billion (£8.03 billion) increased within the first three months of 2024 compared with the same time period in the previous year, driven by large US-based deals in energy, tech and financial sectors, according to the data from the London Stock Exchange Group. 

The overall value of global M&A deals has also increased 30% to $690 billion (£557.26 billion), even as the total number of deals fell by 31%. This ‘rebound’ in the M&A deals comes after activity in the market fell to a 10-year low due to low interest rates during the COVID-19 pandemic. 

Fuelled by expectations of central bank rate cuts as early as June 2024, M&A activity has surged. This anticipation has led to easier and cheaper financing for deals, as investors are more eager to lend with the prospect of lower borrowing costs. Meanwhile, due to record-high markets, the rate IPO activity is also increasing. 

Commenting on the story, Corporate Partner, Matt Shakesheff, says: 

We’ve certainly seen an increase in the size and scale of M&A transactions so far in 2024. We’ve also seen an uptick in the number of transactions that our team are managing. The businesses we’ve recently been working with have seen higher valuations and the speed at which they’re able to buy/sell is closing quicker. 

M&A’s challenges and how you can navigate them 

M&A deals – big or small – do not come without their challenges. As with most processes, preparation and organisation is the key to, for the most part, a successful and smooth-running process. Below are important challenges you may encounter during an M&A transaction and how to mitigate them. 

Due diligence 

Skipping the process of thorough due diligence checks can lead to major consequences. This might include approving an acquisition altogether, paying an inflated price, or lacking proper legal safeguards in the deal. However, a structured and efficient due diligence process can significantly mitigate these risks. 

Data rooms can be powerful tools in this regard – they often come with document and folder indexes, allowing for a checklist-driven review process. Additionally, Q&A sections within the data room allow for simultaneous requests for missing documents or clarifications and the review of existing ones, ensuring a complete picture. Finally, having an experienced legal team on hand to set up your data room can streamline the process further – their knowledge of key areas to investigate and ability to present findings in clear, concise reports at the end significantly improve efficiency. 

Unforeseen costs 

M&A deals can be riddled with unforeseen expenses, such as inaccurate financial projections or valuations of the business. Beyond inaccurate valuations and financial projections, integration costs can quickly mount up. These include retaining key staff (e.g. pay increases, bonuses), employee training, additional legal and financial fees, rebranding (if needed), and IT system integration/upgrades. 

The M&A process 

If you are a founder, entrepreneur or in the management team of a SME considering selling, merging with or acquiring another company or business, you’ll need to understand how the M&A process works and the challenges associated. Sign up to our free webinar on Wednesday 12 June at 1:00 PM – 2:00 PM, designed to help founders, entrepreneurs and management teams of SMEs understand and prepare for the key stages of an M&A transaction. 

You can also read our guide on the six main M&A challenges and how to navigate them 

Speaking to a specialist M&A lawyer from the outset will also put you in good stead to having a successful transaction. 

About our expert

Matthew Shakesheff

Matthew Shakesheff

Corporate Partner
Matthew joined Harper James as a corporate partner in May 2021. He has extensive experience of corporate law and corporate finance matters including: mergers and acquisitions, management buy-outs and buy-ins, private equity and venture capital investments, restructuring, refinancing, shareholder and joint venture agreements and commercial contracts. Matthew has also advised a number of high-profile banks on the corporate aspects of their client’s acquisitions and corporate lending.  

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