Is the M&A Dam About to Break: Outlook for 2024 and 2025

If you’ve been watching this space, you’re well aware that MigrationWiz is a powerful tool for streamlining mergers, acquisitions, and divestitures (M&A). Because after the deal making is done, the best way to reap the benefits is to finalize restructuring as quickly as possible so employees can begin working productively and collaboratively within their new reality.

M&A activity hit a peak in 2021 in both value and volume of deals, declining significantly in 2022. However, it appears to be poised for a rebound in the last few months of 2024 and into 2025. Understanding the trends will help internal IT teams and IT service providers prepare to implement migrations quickly and smoothly.

M&A predictions vary depending on the factors you’re looking at. According to BCG, the global value of M&A activity in the first half of 2024 was $1.0 trillion; up 4% compared to the same period last year, but still below the ten-year average of $1.5 trillion. EY forecast in May that 2024 US corporate M&A deal volume would increase 20% and US private equity M&A deal volume would be up 16%. Of course, trends and predictions vary depending on region and industry.

Things are Looking Up

Despite the still relatively low level of M&A activity, many experts are seeing pent-up demand waiting for the right conditions. Corporate leaders are looking at inorganic growth as a way accelerate their profit and transformation goals. This buy-versus-build approach creates opportunities for M&A, allowing corporations to acquire capabilities, talent, and technology – and also divest non-core assets.

Other reasons M&A activity is likely to rebound include:

• Slow activity in the past two years has left private equity firms with ripe portfolios ready to sell. They’ll be looking for an alignment of valuation and available funding.
• Artificial intelligence. AI is disrupting all aspects of business and society. Companies recognize that they can’t fall behind on AI capabilities, and building their own may be impractical.
• Cost of capital. Tightened monetary policy to combat high inflation increased the cost of capital. With the US Fed and other countries lowering interest rates, M&A deals will start to be more affordable.
• In many countries, changing regulations and policies relating to national security, data protection, and ESG require corporate response.
• Growth initiatives. Companies are under pressure by their boards, consumers, and the market to continue digitization initiatives, energy transition, and future-proofing their business models.

The Near Future of M&A

Predicting the future is always fraught. While a number of factors seem to be pointing to a positive M&A outlook in the next few months, there’s still a considerable amount of uncertainty. Here are some factors experts are watching:

• Interest rates. Anticipated interest rate cuts – if and when they happen – will help dealmakers fund acquisitions using lower-cost debt.
• In the US and globally, political uncertainty has postponed major corporate decisions. A number of international elections have been resolved, with all eyes on the drama in the US. Central banks tend to avoid interest rate moves near an election.
• Tensions in Ukraine, the Middle East, and China increase uncertainty and a wait-and-see attitude.

If economic and political uncertainty eases without additional challenges or surprises, market conditions are expected to open up for M&A activity.

It’s Not Across the Board

If you’re inside a company that uses strategic M&A as a growth strategy, you’ve probably already heard some rumblings. If you’re an IT service provider, now’s the time to really tune into your customer needs so you’re ready when the floodgates open. Which industry sectors to keep an eye on depends on which experts you ask, and whether they’re looking at trends or predictions. Here’s what we’re hearing:

• Despite low M&A volume, deal values have increased in four sectors, according to PwC. The sectors that saw high value deals were technology, financial services, oil and gas, and hospitality/leisure.
• EY is seeing the strongest M&A gains in telecommunication, media, and technology, with financial institutions, real estate, and energy also in the plus column. Industrials and healthcare have experienced declines in M&A, mostly due to a drop in the number of large deals.

Of course, let’s not neglect the silent “D” in M&A – divestiture. The EY CEO survey suggests an uptick in a desire to off-load parts of a business in order to focus on core competencies or to raise investment capital.

Get Ready

With so many signs pointing to the potential for increased M&A activity in the following months, now’s the time to prepare. While you may not know the dimensions of a deal until it’s signed and sealed, there’s no reason to be caught by surprise. Here’s a checklist to get you started:

• Know your stakeholders. M&A projects involve people throughout the organization. Consider assembling a team proactively that will include HR, operations, communications, real estate and facilities, and of course executive leadership. When a deal comes to fruition, you’ll want to match your team with the same roles in the acquired company.
• Have a plan. Even without details of a specific deal, you can outline a plan template and begin vetting it to make sure you’re covering all the bases. This will allow you to move quickly and not miss a crucial component.
• Get the right tools. Compare migration tools and you’ll find that the power and versatility of MigrationWiz is what you need to get the data migration done, regardless of the size, scope, or location of your project. You can sign up anytime for a free account and begin familiarizing yourself with the control panel.
• Fill any knowledge gaps. BitTitan has a wealth of resources that you and your team can access for free, including articles, case studies, and whitepapers; easy-to follow tutorial videos; and our highly rated help center.
• Focus on employee success. BitTitan has assisted with numerous M&A migrations, and one thing we hear again and again is the importance of a smooth migration for employee morale and productivity. This can be achieved with a thorough communication plan, empathetic listening, and clear timelines.

Check out the BitTitan website more information about M&A migrations, including best practices for internal IT teams and IT service providers. And be sure to contact us if you need any help planning your next migration.