According to estimates from the international consultancy firm Bain & Company, the total value of M&A transactions by the end of 2024 is projected to reach $3.5 trillion. The authors of the study highlight that during the analyzed period, market participants faced significant challenges – they had to adapt to a new reality of higher interest rates and stricter regulatory scrutiny. At the same time, to save time, reduce costs, and streamline efforts, an increasing number of investors used generative artificial intelligence during transactions.
Bain & Company predicts that by the end of 2024, the total global value of M&A transactions will reach $3.5 trillion, reflecting a 15% year-over-year increase and a return to levels seen in the middle of the previous decade. The analysis also shows that the global number of transactions will increase by 7% year-over-year, reversing a two-year downward trend.
Performance Across Investor Categories
The situation among various categories of investors in the M&A market is diverse. A slight drop in interest rates helped private equity and venture capital funds regain their positions, leading to a 29% and 30% year-over-year increase in the value of their transactions, respectively. In contrast, strategic and corporate investors, who are less sensitive to capital cost fluctuations, are expected to achieve a 12% growth globally this year, with increases evident across all regions.
The key drivers of growth were heightened activity in the energy and natural resources, industrial, and financial services sectors, as well as significant developments in retail and telecommunications. However, sectors like technology, healthcare, and biotechnology – historically strong drivers of M&A – lagged behind their previous highs.
“Despite solid financial results and strategic demand for mergers and acquisitions in 2024, market participants were hoping for a stronger monetary boost and greater investor readiness to exit investments, which could drive a full market recovery,” says Paweł Szreder, Partner at Bain & Company. “However, it’s worth noting that leading investors quickly adapted to changing market conditions, moving away from traditional methods in favor of seeking synergies in both revenue and costs. They continued refining their M&A competencies, focusing on selection, negotiation, and leveraging new tools, including AI, to streamline transaction preparation processes.”
Transaction Barriers Amid Historically Low Valuations
A Bain & Company study involving over 300 investors revealed that the greatest barrier to completing transactions is the valuation gap between buyers and sellers. This issue stems from a discrepancy between historically low valuations among strategic investors, averaging 10.4x EBITDA/EV, and record-high stock market valuations, which for the S&P 500 index in New York reached 16.6x.
Rather than accepting significant valuation reductions upon exiting investments, private equity and venture capital investors opted to retain these assets in their portfolios. Similarly, private and public companies chose to hold onto their investments. Consequently, with reduced competition and minimal pressure, some transactions stalled.
Regulatory Oversight and Extended Closing Periods
In 2024, regulatory challenges and legal disputes significantly lengthened the transaction closing process, affecting deal execution. Nearly half (47%) of investors admitted that regulatory concerns directly influenced the types of deals their firms considered this year. In response, many organizations adjusted their strategies, dedicating more time to preliminary selection and thorough evaluation of transactions for antitrust compliance. Some investors, due to regulatory uncertainty, paused their plans, anticipating changes following local elections.
This situation led companies to focus either on small transactions unlikely to attract regulatory scrutiny or on large deals with high potential, while mid-sized deals were largely avoided. This year, mergers and acquisitions valued at less than $1 billion accounted for 95% of all transactions, and their number increased for the first time in four years. Meanwhile, mega-deals worth over $5 billion significantly boosted the overall transaction value.
Bain & Company experts anticipate potential changes in U.S. and EU administrations, as well as updates to guidelines in India and Japan, which may signal a more lenient regulatory approach in the future. However, the timing, scope, and degree of any regulatory easing will likely vary by sector and market.
Adapting Strategies to Higher Interest Rates
In response to persistently high interest rates, strategic investors have become more selective with transactions. They now require clearer value-creation strategies and are less willing to pay for potential gains that may materialize in the distant future. Most importantly, they have adapted to new valuation levels while seeking both revenue and cost synergies.
Transactions leveraging economies of scale to strengthen market positions and reduce costs accounted for 59% of the total transaction value in 2024 – the highest percentage since 2015. This indicates a shift toward acquisitions promising quick and easily realizable synergies within the first year. This marks a significant change from previous years when acquisitions aimed to accelerate revenue growth by expanding into fast-growing markets or acquiring new competencies.
AI Revolutionizing M&A Transactions
In 2024, generative artificial intelligence gained popularity among M&A professionals, who used it for identifying and selecting acquisition targets and conducting due diligence. Bain & Company’s research shows that one in five investors used AI this year, compared to 16% in 2023. An additional 16% plan to implement AI in the next twelve months. Early user experiences indicate that generative AI significantly reduces workload (79% of users), speeds up transaction execution (54%), and lowers costs (33%).
What’s Next for the M&A Market?
Bain & Company will publish its full M&A report for 2025 in February. The report will provide a detailed analysis of expected M&A activity in the upcoming year. It will cover key industries and present findings from the “M&A Practitioners’ 2025 Outlook Survey,” summarizing insights from over 300 practitioners in countries such as the U.S., Australia, Brazil, Canada, France, Germany, India, Italy, Japan, and the UK.
