Dive Brief:
- The volume of U.S. mergers and acquisitions valued at more than $100 million is on track to increase 8% this year, driven in part by rising demand for artificial intelligence capabilities, according to EY-Parthenon's mid-year M&A outlook.
- Deal volume is projected to rise 11% in the corporate segment while remaining flat among private equity firms, which are adopting a more measured and selective approach amid rising geopolitical tensions, according to the analysis.
- “Private equity investors are being much more careful about where they put their money right now,” Mitch Berlin, EY-Parthenon Americas vice chair at Ernst & Young, said in a press release.
Dive Insight:
CFOs are making record investments in AI and digital transformation while pulling back on cost cuts as optimism about the broader economy remains mixed, according to separate research released in March by Grant Thornton.
“Companies are balancing short-term profitability requirements with the long term,” Grant Thornton Audit Growth Leader Mike Desmond said in a press release at the time. “They have today’s cost and profitability pressures, but they’re also focused on the investments needed to drive value in the future.”
EY described its projection for an 11% increase in corporate M&A volume as a “baseline,” with the level potentially softening to 5% in a pessimistic scenario.
The outlook comes as corporate executives continue to navigate a volatile business environment.
Nearly three-quarters (73%) of C-suite leaders say that geopolitical and economic headwinds — such as changes in interest rates, trade policy, inflation and supply chain disruption — have impacted their growth strategies over the past year, EY-Parthenon found in a recent survey.
Despite those challenges, dealmaking activity has remained robust in the first five months of the year.
Through May 31, U.S. transactions valued at more than $100 million totaled $1.43 trillion, up 62.3% compared with a year earlier, according to EY-Parthenon data shared with CFO Dive. Deal volume also increased, rising 16.4% year over year to 774 transactions.
Technology dealmaking logged strong gains, with transaction value reaching about $479 billion, up 65% year over year, while deal volume rose 10% to 234 transactions.
“While external tensions and trade frictions are adding complexity to dealmaking, CEOs continue to view M&A as a core driver of transformation in a time of accelerating AI adoption,” Berlin said.
