PitchBook News - Why M&A is picking up steam

By region, North America leads with a 32% increase in deal value while Europe saw a rise of 24%.

We expected 2024 to be a recovery year given that M&A almost always bounces back after two straight years of decline. The prior two-year swoons of 2007-2008 and 2001-2002 registered peak-to-trough declines of approximately 60% to 70%, followed by equally sharp upturns in year three.

This compares to a peak-to-trough decline of 35% in 2022-2023, setting the stage for the more modest recovery in 2024 that we are seeing now.

While corporate-led M&A came out of the gates early, PE buyouts lagged due to high borrowing costs. That began to change in Q2, and as of Q3, the PE buyer is now all in.

PE's share of the M&A "wallet" is no longer shrinking as a result. After peaking at 45% in 2022, the PE share of all M&A value slipped to 40% in 2023 before righting to 41% YTD, roughly in line with its five-year average.

Other key takeaways from the report include:

• With central banks now in sync globally cutting rates, the M&A market can look forward to a second round of reduced borrowing costs after a first round of "stealth" cuts administered by US and European lenders.

• M&A deal multiples continue to bump along the bottom at 20-25% below their 2021 highs. By contrast, public trading multiples have raced all the way back and then some on an EV-to-EBITDA basis.

• US valuations have firmed while Europe's have yet to find a bottom.

• We rank industries and sectors by deal and valuation momentum; software made a big move in Q3.

• We run the latest tally on merger-related antitrust actions; PE dealmakers in healthcare got a positive surprise decision in California.

You can find the complete details in our Q3 2024 Global M&A Report.