CFOs look to M&A market for growth in 2024

While normal people have been waiting for news about their favorite sports team or whatever normal people wait for, CFO Brew has been waiting for signs about the state of the M&A market in 2024.

Rejoice, merger nerds: Deloitte’s Q4 2023 CFO Signals survey, which serves as a pulse-check for more than 120 CFOs, is out this week, and with it comes some useful M&A data.

A third of the CFOs surveyed said they expect their companies to close more deals in the next year. Only 13% anticipated they'll close fewer average deals in 2024.

They have big goals for what those deals can do for them: More than half expected between 1%–10% of their growth to be fueled by M&A in the next three years.

A few other stray, key stats: Almost three-quarters of the respondentss said one of the top three challenges to “M&A or deal success” in 2024 was “valuation of assets and widening spreads between bids and asks.” And nearly half said they’d “likely use all cash to finance their deals in the next year.”

So what do these results tell us about the state of M&A activity for the next year?

“It’s a mismatch,” Steve Gallucci, global and US leader of Deloitte’s CFO Program, told CFO Brew. “I sound like a little bit of a broken record here, but clearly the macroeconomic environment—high interest rates, to be specific—has put a damper on companies’ ability to employ capital to do higher level M&A.”

“We’re not breaking any news here to tell you that lower interest rates create a much more robust M&A environment,” he added. “Clearly, CFOs see the capital markets, the debt markets, as, historically speaking, relatively unattractive right now.”

And CFOs seem keen to continue looking toward the M&A market for growth.

“You’ll continue to see people who look at the strategic use of M&A,” Gallucci continued. “We asked people what they would use M&A for, and it was a whole slew of different things: to build capabilities, to improve competitive market position. I think we’re going to continue to see that, too.”