M&A Q2 2024 Insights into the Resurgent M&A Landscape

Tristan Rice shares SI Partners' view of the latest trends we are witnessing. Dive into the detailed review for an in-depth understanding of the evolving M&A landscape.

Q2 2024 M&A update in full

So the anticipated M&A bounce seems to have arrived. You can already see evidence of that in the public domain, with a steady stream of deal announcements over the last couple of months. And behind the scenes, many more potential sellers are getting their ducks in a row after a tumultuous 2023.

For many, the question is one of timing. They don’t necessarily want a deal based on last year’s results, which probably included at least one quarter impacted by macroeconomic events beyond their control. But judging from the discussions we’re having with founders from across the spectrum, they’re feeling much more optimistic about this year.

Buyer demand has remained strong

The default timing for most is to get to within sight of the full year result before going to market.

However, as we’ve previously highlighted, buyer demand has remained strong throughout this period and the lack of willing sellers over the last 12 months has created something of a bottleneck. Buyers are busy trying to persuade their target companies to engage sooner. And a bird in the hand is worth two in the bush…

What that means in practice is that we’re likely to see quite a lot of deals being done over the summer and autumn, either based on the full year forecast, or with a top-up payment after the year end.

Shift in PE deal dynamics: focus on integration and refinancing

The make-up of those deals is likely to be somewhat different to recent years though. We’ll probably see fewer bolt-on acquisitions as some of the more mature PE-backed groups look to exit this year or next. In the months leading up to that, they will tend to focus on integration and operational efficiencies – tidying up what they have rather than complicating it by making more acquisitions.

And based on the findings of our recent PE Insights Report, most will sell to another fund. We examined PE deals in digital and marketing since 2010 and found that of the 20 groups that’d exited, 15 were refinanced rather than sold to a trade buyer. 

We will however see more new platforms created, as funds look to deploy the still considerable capital at their disposal. And corporate buyers continue their resurgence, as they look to plug the gaps created while they were outcompeted by aggressive buy and build strategies over the last few years.

Interest from IT consultancies

In particular we’re seeing renewed interest from IT consultancies, looking for a wide range of capabilities, from digital products and experience to commerce and data analytics. And while content-based AI skills have yet to fully emerge from hype to commercial application, there is certainly plenty of interest in companies that have harnessed AI to increase the speed and efficiency of talent-based processes.

All of this, combined with improving economic news despite the perilous state of the world more generally, means that we can expect a pretty strong year for M&A across marketing and technology service sectors.