M&A market: What will it look like in 2024?

The top three U.S. M&A deals of 2023 by deal value include, Exxon (XOM) acquiring Pioneer (PXD), Chevron's (CVX) acquisition of Hess (HES), and Pfizer (PFE) acquiring Seagen (SGEN), according to Dealogic. The KPMG 2024 M&A Outlook Survey found that 7 in 10 dealmakers are working currently on deals and 2 out of 3 said 2024 will be more active. KPMG Head of Deal Advisory & Strategy Carole Streicher joins Yahoo Finance Live to discuss the survey's findings and what 2024 will look like for mergers and acquisitions.

"If you unpack what we think '24 is going to look like, based on the survey respondents, it's quite interesting compared to our private equity versus corporate," Streicher notes. "If you look at the first half of the year, our corporates are saying that they're going to be more active in doing deals. And in the second half of the year, our private equity clients and survey respondents are saying they're more likely to be active in doing a deal."

"Our corporates are much more concerned about transformation of their business... whereas private equity is more cautious around interest rates," Streicher adds.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

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- It appears that dealmakers are optimistic that 2024, will be the return of mergers and acquisitions. That's according to KPMG's 2024 M&A outlook survey. 2/3 of dealmakers responded that they foresee next year being more active. This comes on the heels of what has been an interesting year in the space. The likes of Exxon acquiring Pioneer or Pfizer taking over Seagen.

And now Warner Bros is reportedly eyeing a merger with Paramount Global. While many other acquisition attempts have been abandoned. Let's bring in Carole Streicher who is the head of deal advisory and strategy over at KPMG for an exclusive interview, breaking into the survey findings and what's next for M&A in 2024. So if we were to compare 2024 to what the reality is that's played out in 2023 is, what is kind of the net delta here that we're anticipating, Carole.

[CAROLE STREICHER]: Yeah, so as we think about the future for 2024 and what we've seen from the response to the survey that we just conducted, that's hot off the press we did it over the last week of November and first week of December, with a couple hundred executives that focused on deals. As you mentioned, Brad that there is 2/3 of the respondents said that they're looking to do deals in 2024. And there's a lot of pieces of the puzzle, that really help bring that to a reality this next year. We're very optimistic here at KPMG. What we see with our clients right now is that they're absolutely leaning in on deals. And as we look at the survey respondents, about 70% of the respondents said that they're currently working on a deal right now.

If you unpack what we think 24 is going to look like based on the survey respondents, it's quite interesting, compared to our private equity versus corporate. If you look at the first half of the year. Our corporates are saying that they're going to be more active in doing deals and in the second half of the year. Our private equity clients and survey respondents are saying they're more likely to be active in doing a deal. There's a lot of reasons to unpack that. But that's we're looking into 24 based on what we saw from the survey respondents.

- Carol, can you talk a little bit more about that and why you think we are seeing that discrepancy?

[CAROLE STREICHER]: Yeah, absolutely. So, as you think about the response from our survey respondents, and you just think about the market in general, our corporates are much more concerned about transformation of their business. And they are very leaning into deals that are going to help them expedite the transformation of their business. Whereas private equity is more cautious around the interest rates. And at KPMG, we believe that there's going to be quarters point drops in interest rates, starting in the spring of next year.

And that therefore, makes our corporates a little bit less sensitive to those interest rates, increases or decreases if you will, and more bullish around doing the deal in this first half of the year. Private equity might sit on the sidelines a little bit as interest rates start to come down, as they are more sensitive to the interest rate environment in executing deals. So I think that's a little bit of what's happening. The other thing that we oftentimes look at, is during an election year that can have some headwinds to deal activity.

But based on the survey respondents, that was much lower on their list. And isn't a deterrent to doing deals this year. They were more concerned around, the market stability, interest rates, driving transformation for their business. And so that's I think, why we're going to see, a, we're optimistic to what we will see from a deal perspective in 2024.