Citizens M&A Outlook Finds Surging Enthusiasm Supported by Unexpected Factors
January 10 2024 - 9:01AM
Business Wire
Optimism for an economic and M&A rebound
shines through, especially among potential buyers
Citizens’ 2024 M&A Outlook revealed optimism around the
environment for dealmaking activity this year, underpinned by solid
expectations for the U.S. economy and a pop in enthusiasm,
especially among buyers. The annual survey of 400 leaders at U.S.
middle-market companies and private equity firms also uncovered
notable trends related to interest in artificial intelligence (AI)
assets, international dealmaking and the upcoming U.S. election
that provide support for the upbeat forecast.
Mid-market firms are the most optimistic they have been since
2020, with 46% expecting a strong M&A market in 2024. PE firms
are even more positive. More than half (52%) see strength in the
current M&A market, up from just 38% last year. Further, 46% of
PE firms expect higher deal volumes in 2024, compared to just 19%
that expect deal flow to decrease.
“A sense of normalcy is returning to the M&A environment.
Companies across sectors are looking at their economic prospects
and seeing opportunities,” said Jason Wallace, head of Citizens
M&A Advisory. “There is still caution, but that positive
economic backdrop will continue to bring activity back to the
market.”
Fewer mid-market companies cite operating factors such as
commodity prices, interest rates and labor markets as headwinds for
2024 than did so in 2023, and the average economic forecast is
significantly more optimistic than it was last year. Forty-six
percent of mid-market companies and 50% of PE firms expect U.S.
economic conditions to improve in 2024. Among those who expect an
improving economy, 68% are likely to engage in M&A activity
this year.
As economic conditions improve, more assets are expected to come
to market, contributing to palpable buyer enthusiasm. Of the PE
firms who see higher deal flow in 2024, 79% expect to buy more than
they did in 2023, while only 21% expect to sell more. Among
mid-market firms, the pool of potential buyers also expanded for
the second year in a row.
“The disruptions to M&A in ’22 and ’23 have led to some
imbalances, for instance the sheer amount of private equity capital
on the sidelines,” said Gavin Slader, head of M&A at Citizens
JMP Securities. “We are now seeing excitement from buyers, which
could be just what the markets need to find balance again.”
Unexpected factors support M&A optimism
In addition to upbeat expectations for the U.S. economy in the
year ahead, the survey revealed several unexpected factors that
could catalyze dealmaking in 2024. These include:
- PE Firms look ready to shop, and AI is on the wish list.
Of the PE firms that see higher deal flow in 2024, eight in 10 say
they expect to buy more than they did in 2023 and a quarter are
looking for AI assets to add to their portfolio.
- International prospects are back on the table. After
four years of declining expectations, buyer and seller interest in
foreign deal partners rebounded in 2024. Among mid-market
companies, 51% of sellers and 44% of buyers say they would consider
international deals. PE firms’ interest in international investment
opportunities increased year-over-year to 55% from 37%.
- The 2024 U.S. election could be a driver for M&A.
Uncertainty regarding the outcome of the upcoming U.S. election
could support dealmaking in the first half of the year. Forty-one
percent of mid-market companies say the pending election makes them
more likely to pursue M&A in 2024, while just 25% say it makes
them less likely to pursue a deal.
The survey was conducted among U.S.-based middle-market
businesses ($50 million to $1 billion in revenue), as well as PE
firms (fund size less than $1.5 billion) that are active in the
acquisition and sale of U.S.-based companies in the same revenue
range. Core business sectors included Citizens’ industry
specialties of aerospace, defense and government services; business
services; consumer; gaming, lodging and commercial real estate;
healthcare; industrials; technology, media and telecommunications;
and transportation and logistics, as well as other industries.
Business executives at 277 middle-market firms and 123 PE firms
who are directly involved in decision-making related to M&A
(owners/partners, CEOs, presidents and other C-level executives and
directors) completed a phone or web-based survey between November
and December 2023.
For more information on this year’s Citizens Middle Market
M&A Outlook, please go to www.citizensbank.com/maoutlook. To
register for a Jan. 25 webinar on the report, please go here.
Citizens M&A Advisory specializes in middle market mergers
and acquisitions. Citizens combines sector intelligence with a
client-focused approach to realize our clients' true value. The
Citizens team has more than 100 M&A professionals specializing
in a range of industries across the United States. Citizens M&A
Advisory is part of Citizens JMP Securities, LLC, a subsidiary of
Citizens Financial Group (NYSE: CFG). For more information, please
visit the Citizens website.
About Citizens Financial Group,
Inc.
Citizens Financial Group, Inc. is one of the nation’s oldest and
largest financial institutions, with $225.3 billion in assets as of
September 30, 2023. Headquartered in Providence, Rhode Island,
Citizens offers a broad range of retail and commercial banking
products and services to individuals, small businesses,
middle-market companies, large corporations and institutions.
Citizens helps its customers reach their potential by listening to
them and by understanding their needs in order to offer tailored
advice, ideas and solutions. In Consumer Banking, Citizens provides
an integrated experience that includes mobile and online banking, a
full-service customer contact center and the convenience of
approximately 3,300 ATMs and approximately 1,100 branches in 14
states and the District of Columbia. Consumer Banking products and
services include a full range of banking, lending, savings, wealth
management and small business offerings. In Commercial Banking,
Citizens offers a broad complement of financial products and
solutions, including lending and leasing, deposit and treasury
management services, foreign exchange, interest rate and commodity
risk management solutions, as well as loan syndication, corporate
finance, merger and acquisition, and debt and equity capital
markets capabilities. More information is available at
www.citizensbank.com or visit us on Twitter, LinkedIn or
Facebook.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240110058598/en/
Frank Quaratiello 617.543.5810
frank.quaratiello@citizensbank.com
Citizens Financial (NYSE:CFG)
Historical Stock Chart
From Apr 2024 to May 2024
Citizens Financial (NYSE:CFG)
Historical Stock Chart
From May 2023 to May 2024