In a recent fireside chat, Suzanne Kumar, Vice President of Global M&A Practice at Bain and Company, shared her insights on the global M&A outlook, touching upon regulatory concerns, the impact of Generative AI (Gen AI) on deal-making, and the value creation in M&A. Hosted by Giovanni Amodeo, the discussion delved into several key areas, providing a comprehensive overview of the current and future state of mergers and acquisitions.

M&A Outlook for 2024 and Beyond: Kumar highlighted the M&A market’s recovery after a two-year decline, influenced by a sharp increase in interest rates about a year and a half ago. Looking ahead to 2024, there’s optimism for a more positive outlook, with interest rates stabilizing and the potential for rate cuts later in the year. Early results from January and February indicate a resurgence in deal activity, particularly in large deals driving growth in specific sectors and geographies.

Regulatory Concerns: The conversation also touched on the regulatory landscape, noting that deals exceeding $20 billion are likely to face scrutiny. Kumar mentioned that sectors like big tech and healthcare are of particular interest to regulators, including the DOJ, FTC, European Commission, and UK Competition and Markets Authority. The aim is to establish legal precedents and ensure deal-makers consider the potential impact of regulatory scrutiny early in the process.

Impact of Generative AI on M&A: Generative AI’s role in transforming the M&A process was a significant topic of discussion. Kumar revealed that 16% of deal-makers are already experimenting with Gen AI for sourcing, screening deals, and conducting due diligence. The potential for Gen AI to streamline integration planning and execution, as well as enhance value creation post-acquisition, was highlighted as a promising development for the future of M&A.

Sector and Geographic Predictions: Kumar predicts a rebound for the tech sector, which had been most impacted by the downturn in recent years. She anticipates strong M&A activity in the US and EMEA, with a notable backlog of deals in these regions. The expectation is for an increase in both the number of deals and the prevalence of larger deals compared to the previous year.

Private Equity and Talent Dynamics: The discussion also covered private equity dynamics, noting that firms are under pressure to return cash from pre-COVID era deals. The slow IPO market has led to alternative exit strategies, such as continuation funds. On talent, Kumar emphasized the ongoing challenge of securing good talent, a dynamic component of the US economy.

Personal Insights: Kumar shared a valuable piece of advice she received early in her career: to write the names of everyone in a meeting at the top of her notes, a practice she continues to find useful. She also expressed a contrarian view to the common belief that most M&A deals fail, arguing that frequent acquirers often derive significant value from their M&A activities.

This fireside chat with Suzanne Kumar provided a rich overview of the M&A landscape, offering valuable insights into the challenges and opportunities that lie ahead in the world of capital markets.

Key timestamps:

00:09: Introduction to ION Influencers’ Fireside Chats
00:41: M&A Outlook for 2024
03:06: Private Equity and Fundraising Activity
04:14: Trends in Mega Deals and Regulatory Pressure
04:54: Private Equity Exit Strategies
06:57: Impact of Interest Rates on M&A
08:28: Regulation in Cross-Border Strategic Deals
10:22: Regulatory Scrutiny and Deal Precedent
13:24: Gen AI and Its Impact on Deal Making
17:01: Role of GenAI in Reducing Deal Failures
18:12: Final Insights and Predictions