Many companies continue to see M&A deals as a crucial avenue to increase their growth even with the global economic slowdown. Inflation rates that are high will continue to pressure deal-making until 2022. Our most recent North American CFO Signals study revealed that a significant portion of respondents believed that between 1% and 10 percent of their revenue growth could be attributable to M&A deals.
Although a number of industry-related challenges have slowed deal activity since the peak in mid-2022, the recent stabilization of interest rates and inflation is a good sign that the worst may be over. This, together with the renewed confidence in the US economic system and the dissipation of fears of a recession, should hopefully spur more companies to pursue strategic deals in the coming year.
We anticipate that the upcoming year will be one of the busiest for M&A across a wide range of industries. The industrial sector is expected remain a prime target, particularly for acquisitions focusing on innovative technologies like EVs or cloud-based solutions. We also anticipate that the shift to energy will be accelerated and that companies operating in this sector may look to acquire assets and capabilities that will help them achieve success.
After a significant downturn for the tech industry in 2022 we anticipate an increase in 2024 as artificial intelligence (AI) and its associated applications, such as artificial intelligence that is generative, attract the interest of businesses, investors as well as the general public. The healthcare sector is also a major area of focus for M&A, as both companies and investors vie to bring niche medtech products to the market.