Today, Deloitte released the findings of its "2024 M&A Trends Survey: Mind the gap," asking corporate and private equity (PE) leaders in the U.S. about their expectations for M&A activity in the upcoming 12 months as well as their experiences with recent transactions.

Executive sentiment toward M&A activity for the year ahead is optimistic, with respondents across corporate and PE expecting a rebound in both volume and value. Eighty-three percent of these executives anticipate deal volume to increase over the next 12 months, and 82% expect the volume of their own organization's deals to grow larger in the coming year as well.

A similar trend can be seen with respondent outlook on deal value, with 82% indicating they expect the size of their own organization's deals to increase in the coming year.

This is further substantiated by findings from Deloitte's most recent 4Q23 North American CFO Signals™ survey with just over half (51%) of CFOs estimated 1% to10% of their companies' growth in the next three years to come from M&A while 19% indicated between 11% and 50% of growth could derive from M&A in that period.

Deloitte's "2024 M&A Trends Survey" marks the largest cohort of respondents in its 10-year history, capturing insights from 1,500 U.S.-based executives representing both sides of the dealmaking process, with a nearly 50/50 split between corporations and private equity.

Key findings:

• A focus on internal transformation to lay the groundwork. Corporations and private equity firms have invested more time and energy on internal transformations in the last year, with more than two-thirds (68%) of leaders surveyed stating their organizations had restructured since the pandemic began in early 2020. Another 27% are focused on restructuring now or plan to be doing so within the next six months.
• A penchant to pivot as new challenges have emerged. With a slower M&A market during 2023, corporate and private equity respondents reported successful pivots in response. For example, 51% of respondents have pursued alternative financing vehicles such as non-bank and non-traditional lenders while 46% have embraced deal structures beyond traditional M&A, such as JVs and other types of strategic partnerships.
• Leaders seek deals that line up with larger enterprise goals. Corporate (44%) and PE (47%) leaders alike prioritize defining a coherent and well-supported M&A strategy as the most important factor as they consider seeking and executing deals with a strong focus on deal valuation as the second-ranked aspect for corporate leaders (41%) and third-most for private equity (39%).
• Advanced analytics and Generative AI take their place in M&A. Nearly all respondents (99%) said their organizations have begun using advanced data analytics or Generative AI to enhance M&A lifecycle tasks such as identification, valuation, integration, and divestiture, among others.
• Organizations are still looking across borders to make deals. Corporate and PE interest in international targeting to find value has increased 22% in the past two years (68% in 2021 vs. 90% in 2023).
• Sharing what works — and working together. Knowledge exchange between the corporate and PE cohorts is on the rise as both realize their shared lessons can drive better returns. PE firms are also more likely to do business directly with corporate buyers, with strategic sales seen as significantly more likely to be their primary exit avenue (56% 2023 vs. 33% in 2022).

"M&A deals happen when dealmakers feel confident. Market conditions can shape that sentiment, but strategy and preparation set the tone," said Adam Reilly, national managing partner, mergers, acquisitions and restructuring services, Deloitte & Touche LLP. "As every part of the M&A lifecycle becomes more complex, leaders are increasingly recognizing the path to success requires the strong foundation of a well-defined strategy as well as the use of advanced analytics and, in some cases, Generative AI to assess past decision-making, and make better, faster decisions about future deals."