This year we are seeing the world of mergers and acquisitions (M&A) continue to change rapidly, shaped by various factors including technological advancements and regulatory shifts.

"Sharper regulatory scrutiny, which can have a chilling effect on large M&A transactions, can also create a competitive opportunity for enterprises best positioned to complete a higher volume of smaller deals. For those focused on larger deals, it’s important to take a more proactive approach with regulators in 2024.''

Chris Ganly, Gartner Expert

What changes can we expect to see in 2024 for mergers and acquisitions?

Staying on top of these developments is vital to make the most of emerging opportunities. In this article, we'll look at four M&A trends that expect to define the year.

1. Regulations May Make Big Deals Tougher

Regulations are set to cause significant challenges for large-scale deals in 2024, with competition regulators across jurisdictions intensifying their scrutiny of mergers and acquisitions. This tightening of laws is particularly notable in deals involving listed companies, as regulators worldwide aim to ensure fair competition and prevent monopolistic practices. While this makes it harder to do big deals, it makes smaller deals more attractive. A deep understanding of changing regulatory requirements and the ability to adapt swiftly to meet ever-evolving compliance necessities is a must for Mergers and Acquisitions this year.

2. Tech-Driven Deals Continue in Popularity

Technology remains key to M&A activities in 2024. With an uncertain economy, it will be hard for startup tech companies to get money from investors. This will open the door for large financially lucrative companies to buy startup tech companies at lower prices. 

Companies will also seek to improve their capabilities and competitiveness through strategic acquisitions. Whether it's using artificial intelligence (AI) for advanced analytics, buying cybersecurity firms to improve data protection, or integrating blockchain technology for supply chain optimization, tech-driven deals are set to remain popular in 2024. 

With the increase in remote work and digital collaboration, we anticipate a surge in acquisitions focused on remote communication tools, virtual collaboration platforms, and cybersecurity solutions to adapt to our ever-changing work environment. 

3. ESG Integration On the Rise 

Environmental, Social, and Governance (ESG) considerations have emerged as central pillars of corporate strategies worldwide, and this is increasingly mirrored in M&A transactions.

In 2024, we expect a heightened emphasis on ESG integration throughout the M&A process, from due diligence to post-merger integration.  As companies align their business practices with sustainability goals, M&A provides an excellent opportunity to evaluate and enhance ESG performance. Whether it involves evaluating the environmental impact of a target company's operations, examining its social responsibility initiatives, or assessing governance structures for transparency and accountability, ESG considerations will play an integral role in shaping M&A decisions in the future.

 4. Get Ready for More AI-Based Deals

A survey by Bain found that AI is seen as the top technology that’s changing industries and we expect more companies to focus on buying businesses that use AI this year. Using artificial intelligence (AI) will make mergers and acquisitions (M&A) faster and smoother, says Gartner, advising that companies should start using AI in their own M&A processes, especially for contract negotiation and renewal. If your company doesn’t have the skills or time to build its own AI, the recommendation is to buy companies that already have it.

Mergers and acquisitions will require a proactive approach in 2024 to tackle the changing market. Regulatory scrutiny is intensifying, making large-scale deals more difficult but creating opportunities for smaller ones. Technology-driven deals continue to gain popularity, with big companies using their financial strength to buy struggling tech startups and improve their technological capabilities. Environmental, Social, and Governance (ESG) considerations are becoming an essential component of an M&A decision, reflecting the growing importance globally of sustainability and corporate responsibility.

The integration of artificial intelligence (AI) will streamline M&A processes, offering efficiencies in tasks such as contract negotiation and document analysis. As the world of M&A continues to evolve, businesses must keep on top of these trends and use new strategies and technology for M&A success.