The dealmaking outlook for 2024

Dealmaking in the global M&A market remained active in 2023 despite major headwinds, although larger deals fell out of favour due to uncertainty from geopolitical turmoil. However, research showed buyers outperforming the wider market as recently as the third quarter of 2022. The fundamentals driving dealmaking are still in place and, with valuations moderating after the levels reached in 2021, buyers will take advantage of better-priced opportunities for growth in 2024.

It’s thought buyers will focus on smaller deals, and opportunities in distressed M&A scenarios, as they will be able to expand at reduced rates. And there will be other opportunities in 2024 such as a breaking wave of technology acquisitions, mainly in AI and machine learning markets. Fundamental forces are at play, and they’re set to create massive opportunities for IT companies. Because, as the old saying goes, “It’s an ill wind that blows nobody any good.”

M&A interoperation is crucial

Think about it. Many companies with sound business models and viable markets continue bleeding cash. Some will run out of road, making them susceptible to predators or pushed into a forced sale. Consolidation will continue to occur in stressed sectors like food and drink, hospitality, retail, and property. Meanwhile, the global private equity industry is sitting on ‘dry powder’ of more than $2.49 trillion around the middle of 2023. Much of that remains still to be spent.

Take all that together and the signs are clear. As we move towards 2024, mergers and acquisitions will take off and head skyward. Mid-market deals will be pressured to complete quickly. But if we’ve learned anything from M&A over the years, the devil’s in the IT detail. Failure to get legacy systems to interoperate has wrecked marriages that looked no-brainers on paper.

Cloud holds the key

But that was then, and this is now. Today we’re no longer forced to hold everything together with string and sealing wax. The cloud offers a platform to abstract apps and data away from expensive on-prem hardware. Software as a service allows systems to be brought together free of physical limit. Open APIs mean they can talk to each other, too, with minimal effort. VoIP provides telephony as a service, again without needing costly on-prem equipment, while Microsoft Teams and collaborative platforms integrates global dialling into the UC domain. Others will follow suit.

So, there’s an M&A sales pitch just begging to be made. Anyone considering crunching two companies together and making the combination work seamlessly from the start will be mighty interested. We believe the 2024 deal waterfall will start flowing soon.

So, take our tip. Put together an M&A value proposition now. Which we can, of course, help with. Keep your eyes open. Scrutinise the financial papers and the trade press. Track potential mergers and acquisitions on websites like Market Watch (there are many more). Then pick up the phone to the prime movers.

If you’re about to put pen to paper and need an expert hand, reach out to GoRefCo.We’d be delighted to help.