Uptick in Q2 M&A Transaction Volume
By Robert Murphy, Senior Managing Director and Alberto Sinesi, Director
For the second quarter, M&A transaction volume in North America after all deals are reported is expected to be 4,300 – a seven percent increase over the average of the prior four quarters. PKF Investment Banking anticipates a three to four percent increase in deal volume for 2024 compared to 2023 and an upward trend over the next six quarters. We attribute this to aging baby boomers contemplating a potential exit scenario and an abundance of available capital, with corporate cash on hand estimated at $4 trillion (Bloomberg) and $1 trillion of accumulated private equity dry powder (2024 US Private Equity Outlook Midyear Update).
Annual M&A Transaction Volume (Deal Count) in North America
Source: Pitchbook and PKF Investment Banking research
Note: Last two quarters of 2023 and first two quarters of 2024 include estimates based on deals reported through August 31, 2024.
Quarterly M&A Transaction Volume (Deal Count) in North America
Source: Pitchbook and PKF Investment Banking research
Note: Last two quarters of 2023 and first two quarters of 2024 include estimates based on deals reported through August 31, 2024.
Observations for the First Eight Months of 2024
- There is a persistent shortage of high-quality assets in the marketplace.
- High-quality assets are transacting at premiums.
- Scarcity of high-quality assets has caused private equity to move down in transaction size.
- Valuation multiples in the middle market have stabilized after contracting in 2023.
- Valuation gap expectations between buyers and sellers are narrowing.
- Private equity add-on activity remains robust.
- Increasing optimism for a strong 2025 M&A market.
Industry Sectors in Demand
The table below provides an illustrative list (not a complete list) of industry sectors that have witnessed resilient M&A activity and healthy valuation multiples. Sectors in favor include companies with strong end markets, tangible growth opportunities, visibility of earnings, consolidation strategy and attractive cash flow and margin profile.
Select Sectors Observing Resilient Activity |
| Favorable Business/Sector Characteristics |
| Tech-enabled health care and business services | Recurring purchasing pattern/revenue visibility | |
| Financial services/fintech/insurance | Solid cash flow profile vs. growth at all costs | |
| SaaS | Sticky customer/vendor relationships | |
| Value-added distribution | Functional nature of products/services | |
| Automotive aftermarket/services | Premium brand positioning | |
| HVAC/landscaping/roofing services | Efficient operations mitigating supply chain issues | |
| Pet services/foods | Defensible segments even during a downturn | |
| Better-for-you foods/health and wellness products | Fragmented spaces ripe for consolidation | |
| Frozen foods/ethnic foods | Underlying secular trends with strong tailwinds |
Looking Forward
We expect that our next update in January 2025, after the election and with expected rate reductions over the coming months, will have a very positive outlook for both deal activity and valuation multiples in 2025.
Contact Us
- Robert Murphy
Senior Managing Director
PKF Investment Banking
rmurphy@pkfib.com | 561.337.5324 - Alberto Sinesi
Director
PKF Investment Banking
asinesi@pkfib.com | 203.273.5024
About PKF Investment Banking
PKF O’Connor Davies Capital LLC (DBA PKF Investment Banking) is a subsidiary and investment banking affiliate of PKF O’Connor Davies Advisory LLC. Securities-related transactions are processed through an unaffiliated broker-dealer, Burch & Company, Inc.
Whether a business owner is ready to sell the company or seeking growth through acquisition, our investment banking team is committed and credentialed to help owners achieve their objectives. PKF Investment Banking provides guidance through every step of the process and brings the expertise to enhance certainty to close – while always staying focused on maximizing the value derived from the transaction.
With deep expertise in and a dedicated focus on advising privately held middle-market businesses, the PKF Investment Banking team has completed over 300 M&A and capital raise engagements in North America and abroad during their careers. Our key services include sell-side and buy-side M&A advisory, exit readiness and transaction planning. For more information, visit www.pkfib.com.
PKF Investment Banking provides this report for information purposes only and it does not constitute the provision of financial, legal or tax advice or accounting or professional consulting services of any kind.