Dealmakers finally have a data-driven window into where mergers and acquisitions could head over the next six months. Boston Consulting Group has unveiled its M&A Sentiment Index, a monthly gauge of executives’ appetite for transactions, divestitures, and acquisitions worldwide.
The index debuts at a pivotal moment. Global M&A activity clawed back from last year’s lows, yet remains uneven across regions and sectors. Decision makers want reliable signals, not quarterly hindsight, as they weigh capital deployment amid murky economic conditions.
The current reading sits at 78, well below the ten-year average of 100. That points to restrained dealmaking through the rest of 2024. Still, momentum has shifted upward since November 2023, when the index bottomed out at 62.
Sentiment varies sharply by geography and industry. Europe registers the strongest outlook, alongside energy, materials, and technology, media, and telecommunications. Meanwhile, Asia-Pacific executives and industrial sector players show notable reluctance to pursue transactions right now.
First-half numbers confirm the mixed picture. Worldwide M&A value reached $1.0 trillion, a 4% bump over the same stretch in 2023 but far below the decade average of $1.5 trillion. The Americas dominated with $647 billion in deal value, led overwhelmingly by North American targets.
European dealmaking climbed 23% to $255 billion. The United Kingdom posted a striking 185% surge, lifting its share of European activity to the highest level since 2015. Germany and France, however, saw values fall by 32% and 25% respectively.
Asia-Pacific slumped 40% to an 11-year trough of $117 billion. Japan, China, South Korea, and Australia all retreated significantly. India, Singapore, and Malaysia emerged as regional bright spots.
Technology drove the largest sector gains, with telecom, media, and technology deals jumping 39%. Energy and financial institutions also advanced. Industrials and healthcare lagged considerably, hurt by fewer large transactions.
Megadeal activity wobbled. Ten deals above $10 billion surfaced in the first quarter, but only four appeared in the second quarter. That compares poorly to the historical quarterly average of nine.
Several tailwinds could support activity ahead. Private equity firms still hold enormous dry powder. Valuation multiples have recovered, with the S&P Global 1200 price-to-earnings ratio rising to 23.5x from 15.5x in October 2022. Lower volatility helps buyers and sellers converge on pricing.
Regulatory complexity and geopolitical friction remain stubborn obstacles. Major elections across India, the EU, France, the UK, and the US add another layer of unpredictability for deal strategists.
BCG will refresh the index monthly on the fourth Tuesday. That cadence gives corporate executives, sponsors, and bankers a live read on sentiment shifts before they show up in completed transactions.
