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EY predicts US M&A activity could roll back the clock to 2019 this year with an expected 20% increase in corporate deal volume and 16% uptick in private equity (PE) deal volume.
If its corporate volume prediction holds true, “this would represent a return to near pre-pandemic levels of activity,” the accounting giant wrote in its latest “Deal Barometer” report. The predicted increase would put 2024 deal activity at about 4% below the average observed between 2017 and 2019.
This year started off strong, as Q1 saw a 36% in global deal value and “a striking uptick” in companies’ intentions to divest either an asset or a part of its business, according to EY.
The M&A space has been volatile in recent years. Deals hit record levels in 2021 and early 2022 amid low inflation, low interest rates, a strong economy, and healthy company profits, EY noted. Then activity fell off in 2022 thanks to uncertain economic and geopolitical conditions along with Federal Reserve actions to combat high inflation. Last year saw a 17% decrease in corporate and 15% contraction in PE M&A deal volume.
Looking further ahead, EY expects M&A activity to remain strong next year. It expects corporate deal volume to increase at the same pace of 20% and PE volume to increase at a moderated 10% in 2025.