UK Dealmaking Trends 2024 – The Return of Deals

In the wake of persistently low deal activity over the past two years, the dealmaking landscape is showing signs of change. As interest rates stabilise, inflation falls, and markets become less volatile, dealmakers are presented with new opportunities and challenges.

And it looks like change is inevitable. According to PwC’s 27^th UK CEO Survey, one in five CEOs believe their companies will not be viable in the next 10 years if they stay on current paths, with organic change not sufficing. Acquisitions are increasingly viewed as the way forward, particularly when it comes to adapting technology and accelerating decarbonisation.

Here's a closer look at the trends expected for 2024:

 

Technology

The technology industry, particularly artificial intelligence (AI), is expected to be a top-performing sector as companies seek to acquire innovative startups or merge with complementary businesses to enhance their technological capabilities.

AI holds the promise of enhancing efficiency and productivity across various sectors and is seen by numerous companies as a potential source of future competitive advantage. This expectation is projected to fuel dealmaking in 2024, as acquiring technical talent and tools is often more economical than starting from scratch.

 

 

Energy

With sustainability becoming a pressing concern for investors and consumers alike, many companies will seek to align themselves with environmental, social & governance (ESG) principles through M&A transactions. This could involve acquiring companies with strong sustainability practices or integrating ESG considerations into their due diligence processes.

Additionally, the global decarbonisation process will lead to M&A in the renewable energy space, with targets in this sector likely to continue to attract a significant number of players and capital from any kind of vertical.

With increasing consumer demand for environmentally responsible energy sources, companies focused on solar, wind, and other renewable energy sources are poised to be hot targets for acquisition.

 

Private Equity

2024 holds promise for private equity firms, fuelled by stabilising interest rates, falling inflation, and record levels of dry powder. The valuation gap between buyer and seller is narrowing and the pressure to deploy funds coupled with pent-up deal flow is expected to drive increased activity in the private equity space. As of December 2023, dry powder soared to $2.59 trillion, indicating ample capital for investment.

 

As deal activity picks up, firms are expected to be more aggressive in pursuing opportunities, focusing on deploying funds effectively and exploring new sectors and opportunities that may not have been previously considered. The need for transformation within many companies, combined with the significant funds accumulated by private equity, presents unique challenges and opportunities for dealmakers.

In this evolving landscape, it's crucial for dealmakers and investors to be discerning and prepared. Benchmark International, with its expertise in guiding companies through the sale process and identifying the right buyers, can help navigate these conditions. With careful planning and strategic execution, sellers can capitalise on emerging opportunities.