The upcoming US presidential election might be too close to call, but European investors are still planning US deals despite the uncertainties over the country’s direction of travel from next year.

“The reasons to do M&A in the US (or not) in my experience and from what we see seem to be more based on long-term, strategic decisions, such as costs of energy, costs of labour, accessible market size, consolidation, and other strategic reasons, maybe even geopolitical reasons,” said Gregor von Bonin, partner at Freshfields.

Rio Tinto‘s [ASX:RIO, LON:RIO] recent agreement to acquire Arcadium Lithium [NYSE:ALTM, ASX:LTM] is a case in point. The bidder’s CEO Jakob Stausholm said that the deal is part of its long-term strategy to create a world-class lithium business. He described it as “a counter-cyclical expansion… at the right point in the cycle”.

As a result of deals like this, M&A deal-flow from Europe to the US in the year to date (YTD) has seen 492 deals worth a combined EUR 85bn, according to Mergermarket data. This represents a 10% increase on the same period last year, when 476 deals were closed with aggregate volumes of EUR 77.3bn. To date, 2024 has the highest deal volume since 2021.

The acquisition of Catalent by Novo Holdings, with a value of EUR 16.1bn, is the biggest deal of this year so far. The Denmark-based private equity (PE) and venture capital (VC) firm flagged the deal as the chance to help the life sciences company realise its potential.

Wait for it…

Although European appetite for American targets remains strong in general terms, some dealmakers have noticed a little reluctance to close deals immediately before the vote in November.

“We don’t see a rush to close deals in the US prior to the election,” Caldwell Law‘s London-based partner and Global Director of Corporate M&A Marcus Wolter said. “We do see clients remaining in a waiting position to see how the last quarter of 2024 and the first quarter of 2025 play out. The election is part of that rationale, but it seems like the hesitation is less about waiting for the outcome of the election than it is about the potential chaos and further polarization that may come with it.”

One issue under review is the Federal Reserve’s policymaking. The Fed made a bumper half-point cut in September, leaving its effective rate at 4.83%. Meanwhile, the European Central Bank (ECB) made its third quarter-point cut last week to 3.25%. The bumper Fed cut has been particularly well received by European VC players, Wolter said.

American lifestyle

Factors making the US an essential destination for European bidders include its younger demographics, innovation in tech and lifestyle factors for founders, Wolter said.

Areas of particular interest include artificial intelligence, the energy transition and life sciences, particularly when it comes to early-stage start-ups and companies that are scaling fast. The window to pick up strategically attractive cash-strapped or even distressed opportunities might be closing as M&A and IPOs pick up again, Wolter said.

Mergermarket‘s proprietary intelligence has identified a number of potential deal opportunities. Körber Supply Chain Software, a joint venture between German parent Körber and PE firm KKR [NYSE:KKR], is planning to consolidate companies that develop supply chain software, particularly those that add exceptional technology or market access. It is looking at regional players in the Americas, Europe and Asia.

Meanwhile, Saint Gobain [EPA:SGO] of France has an active M&A strategy, with potential targets in the US and Canada. Also, German co-living services provider Habyt is planning to acquire competitors in North America, Singapore and Hong Kong.

With the fundamentals in place, deal activity is likely to continue for the foreseeable future, no matter which project American voters choose in November.