Thu Sep 26 13:30:39 UTC 2024: ## M&A Activity Shows Signs of Rebound Despite Headwinds
**New York, NY (October 1, 2024)** – Despite a challenging economic environment marked by persistent inflation, high interest rates, geopolitical uncertainty, and heightened regulatory scrutiny, global M&A deal value is on the rise in 2024. According to Skadden, Arps, Slate, Meagher & Flom LLP, total deal value is up year-to-date, driven primarily by the US market.
While deal value has not yet reached 2021 levels, there are signs of optimism for the mid-term, with a notable increase in financial sponsor acquisitions. Globally, aggregate deal value rose 9% through mid-September 2024 compared to the same period in 2023. In the US, deal value surged almost 20% despite a decrease in the number of deals announced.
This surge is largely attributed to a significant number of “megadeals,” defined as transactions valued at $10 billion or more. Notably, 10 deals have surpassed $20 billion, and another 12 have exceeded $10 billion.
Financial sponsors, in particular, have been active in pursuing these megadeals, driving a 66% increase in the value of financial sponsor deals globally through mid-September 2024. In the US, this figure more than doubled, rising 122% to $109 billion.
“The appetite of both corporates and sponsors for very large deals in 2024 is noteworthy, especially given the prevailing economic headwinds,” said Daniel Luks, Partner at Skadden.
Contributing factors to this positive trend include:
* **Recent interest rate reduction:** The Federal Reserve’s recent half-point cut in interest rates has boosted investor confidence and improved financing availability.
* **Increased private and bank financing:** Access to both private capital and traditional bank financing is expanding, further fueling M&A activity.
* **Growing trend of divestitures:** Companies worldwide are increasingly exploring spin-offs and divestitures to maximize shareholder value, creating additional deal flow.
* **Continued pursuit of risk-minimizing strategies:** Companies are seeking joint ventures and minority investments to mitigate risk and reduce capital outlay.
* **Resolution of Delaware Law uncertainty:** Recent amendments to Delaware General Corporation Law (DGCL) regarding stockholders’ agreements have provided clarity and stability for M&A transactions, particularly for financial sponsors.
These factors, coupled with the overall positive outlook for the near-term economic environment, suggest a continued rebound in M&A activity. As Skadden notes, “transactions for the rest of 2024 and beyond in the medium term could contribute to a continuing rebound in deal activity.”
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