Asset management, life sciences, European P2Ps and generative AI will lead 2024 M&A charge  

The continuing volatility in the debt markets has resulted in another subdued year for M&A, with global deal value and volume down 33% and 18% respectively year on year.  However, there was a slight pickup in the second half of 2023 as inflationary pressures began to recede. We expect this trend will continue into 2024.  

Key insights and predictions for the year ahead:  

We are seeing financial sponsors targeting companies for the data they hold in order to build new AI-driven businesses by customising pre-trained AI tools such as GPT-4. In 2024 we expect a rising proportion of deals to have proprietary data as a strategic driver for this reason. The risks involved in generative AI deals change the nature of due diligence, which needs to be more strategic, forward-facing and carried out with a sophisticated understanding of the intended use case of the model. Our report goes into further detail on the key differences involved in generative AI deals.  

With many European listed companies continuing to trade at a discount, we started to see signs of an uptick in public takeover activity towards the end of 2023. This is mainly among mid- and smaller cap businesses struggling to access liquidity with their share prices lower – strategic buyers generally have an advantage over financial investors due to their ability to fund deals with their own stock.   

We take a deep dive into the asset management industry, where challenging market conditions are driving listed and private managers alike to seek protection in scale. At the same time, private firms are targeting boutiques in hot areas such as private credit as they look to diversify their asset focus. With the value in these deals largely resting on the retention of key individuals and assets under management, we explain how to preserve both through the deal process

Finally, we look at prospects for M&A in the life sciences sector, which is staring at its biggest patent cliff for more than a decade with protections on drugs that generate sales of more than USD200bn set to lapse over the next seven years. The last time such a significant portfolio went off-patent over a similar timeframe it sparked a run of big-ticket deals, and we’ve started to see some significant players look to fill the revenue gap through M&A. However, there are reasons why we might not be looking at another period of industry consolidation, from the nature of the drugs themselves to the U.S. election and the rise of AI.

For further information, read the full report here.