Investing.com — Mergers and acquisitions (M&A) activity rose sharply in 2024 after a prolonged slump, marking a substantial recovery after a period of low momentum in 2022 and 2023.
Analysts at Wells Fargo (NYSE:) reports that both the value and volume of mergers and acquisitions increased significantly over the year, driven by a confluence of economic factors that helped create a favorable environment for transactions.
Wells Fargo estimates that the value of deals increased by more than 25% in the first three quarters of 2024, while the number of deals increased by more than 10% compared to the same period in 2023.
This resurgence in dealmaking is largely attributed to improving economic conditions, better access to credit and stabilized market valuations.
Analysts note that companies’ confidence in deal completion timelines has increased, largely due to greater regulatory clarity.
With economic fundamentals on a positive trajectory, companies across industries – including information technology, communications services, energy and utilities – are pursuing acquisitions as a way to capture growth opportunities and improve their competitive position.
The information technology sector in particular has experienced a marked increase in merger and acquisition activity.
The sector has achieved the highest share of the value of global mergers and acquisitions since 2013, reflecting increased interest in digital transformation, cybersecurity and artificial intelligence.
This level of sector-specific involvement underlines the strategic importance of ensuring technology-driven growth continues for a wide range of industries.
Additionally, Wells Fargo analysts suggest that favorable conditions are expected to continue for the foreseeable future. Factors such as expected lower short-term interest rates, stabilizing inflation and strong equity markets are likely to continue to support acquisition-oriented business strategies.
Companies have access to ample liquidity, and many are motivated by a desire to use their cash reserves more actively.
This combination of supportive economic and financial conditions could extend momentum in M&A activity well into next year.
