Global M&A activity in 2024 slowly recovered with an expectation of a rebound this year as the impact of increasing inflation and rising interest rates have started to subside, according to a report from Gallagher Specialty.
The report, Gallagher Specialty’s Global M&A Insurance Report, described the first half of 2024 as “challenging” across various regions. However, the company said deal activity grew gradually in the latter half as sale preparations increased and vendors became more engaged in the due diligence process. This increase in activity in the second half could have been driven by pent-up demand, particularly in the private equity space, along with corporations turning to M&A to accelerate their growth objectives.
Concurrent with the increase in deal activity last year, insurable transactions also increased, with the tax insurance market also improving. The use of Warranty and Indemnity (W&I) and Representation and Warranties (R&W) also continued to spread because of the increased activity, according to the report.
In the UK and European Economic Area (EEA), H1 2024 was very slow due to global economic uncertainty but activity picked up throughout the rest of the year.
M&A activity in the US also saw a rebound in the second half of last year, with expectations that this will be the start of an upward cycle going into 2025, driven by stable interest rates and a more favourable regulatory environment under the Trump presidency.
In Canada, M&A activity was busy in H1 2024 due to “very favourable” market conditions, but this activity was slower than the peak market the country experienced a few years ago.
Deal activity in the Asia-Pacific (APAC) region was slowed by various factors in H1 2024, including inflationary issues, static high interest rates and negative business sentiment. Lead times for the deals also increased during that period, or deals falling over were common in that period due to value disparity. However, as activity slightly recovered in the latter part of last year, there is optimism for increased deal activity this year.
Tax insurance rose in 2024, particularly across Europe and APAC, with more than 20 specialist tax insurers launching their services last year. The report said that more entrants to the market are expected this year.
The tax insurance market is expected to continue its growth trajectory this year, with an increased appetite for risks in Latin American jurisdictions and Southeast Asia.
“Insurers continue to innovate in the known risk space, with Tax Insurance and Contingent Risk Insurance becoming ever-present, especially with buyers needing as much comfort as possible before pulling the trigger,” the company said.
