Bankers say 2024 M&A is just good when ‘it should’ve been great’

financialpost.com:

A flurry of megadeals early in the year failed to translate into a sustained recovery in mergers and acquisitions after the momentum was stymied by skittish central banks and geopolitical unease.

The value of deals globally stands at roughly US$1.4 trillion at the halfway stage, according to data compiled by Bloomberg. While that’s up 14 per cent on the same period in 2023, it still lags the 10-year average for the first half by more than US$300 billion, the data shows.

“The year has been good so far, but all indications suggest it should have been great,” Eric Rutkoske, global head of M&A at Guggenheim Securities LLC, said. “There has been a deceleration and that’s been a little bit surprising because most of the macro indicators actually got better throughout the year.”

The first quarter brought a whirl of megadeals and expectations that central banks would begin cutting interest rates after their most aggressive hiking cycle in more than a decade. But bankers got a reality check when that didn’t happen. In June, the United States Federal Reserve projected just a single rate reduction this year as it patiently manages its inflation objective.

“The jury’s still out on whether rate cuts will start this year,” Ben Carpenter, co-head of North America M&A atJPMorgan Chase & Co., said. “It’s really wait-and-see mode until we understand what direction of travel we’re in and what that means for the broader economy. That’s what’s keeping some folks on the sidelines.”

Higher borrowing costs and rising stock markets have continued to impede negotiations as companies struggle to agree on valuations, bankers said.

“Buyer and seller valuation mismatches have narrowed, but they haven’t been completely bridged, and while capital is