PitchBook Calls 2024 A Rebuilding Year for Global M&A

According to just-released market intelligence from PitchBook, global M&A dealmaking is slowly coming back after two consecutive years of declines. But a stronger recovery is being checked by flat PE dealmaking. Cody Crook, managing director of Hunt Scanlon Ventures, unpacks what it all means for human capital M&A activity.

May 9, 2024 – M&A deal activity rose five to 10 percent year-over-year in the first quarter, despite falling short of Q4 2023 totals, according to new data released by PitchBook. Deal multiples have remained stable, meanwhile – “a sign that the valuation reset may be complete, and have room to move higher to catch up with elevated prices of public companies,” said the market research firm.

Global M&A had declined for two years straight heading into 2024. According to PitchBook, M&A has almost always bounced back from consecutive annual declines, and researchers at the company do not think this year will be any exception.

“The prior two episodes of 2007-2008 and 2001-2002 registered total peak-to-trough declines of approximately 60 percent to 70 percent, whereas the present decline has measured 34.4 percent from 2021’s peak,” said the firm’s latest report. PitchBook estimates that Q3 2023 was the trough in the recent cycle, and Q1 2024 provided some support to that outlook.

Dealmaking is Improving

“Dealmaking is improving,” said Cody Crook, managing director and head of investment services at Hunt Scanlon Ventures. “Our lens is focused on the human capital management (HCM) sector and that is where we have seen a significant uptick in M&A activity more or less since 2024 kicked off,” he noted.

Related: 2024 M&A Outlook: PE Comes Off the Bench

Strong tailwinds across the HCM ecosystem are benefitting a number of adjacencies across the vertical, said Mr. Crook – from executive coaching and culture consulting to executive search, interim services, and AI-enabled talent solutions. “Each and every one of those niche solutions encircle and connect to one another and so we are seeing a big increase in strategic buyers looking to capitalize on some really unusual market dynamics playing out right now,” he said.


Winning Through M&A: The Remarkable Habits Of Successful Dealmakers
Nearly 15 years ago, McKinsey & Company set out to answer a critically important management issue: What type of M&A strategy creates the most value for large companies. The answer that came back was clear: Companies that practice programmatic M&A are likely to outperform competitors. In 2019, McKinsey took another look. It’s research reflected the growing importance of placing multiple bets and being nimble with capital. In a dataset of 1,000 global companies examined over a 10-year period from 2007 to 2017, programmatic acquirers achieved higher excess total shareholder returns than did industry peers using other M&A strategies, such as large deals, selective acquisitions, or organic growth.

In fact, the alternative approaches seem to have underdelivered. Companies making selective acquisitions or relying on organic growth, on average, showed losses in excess shareholder value relative to peers. Now, McKinsey has taken a fresh view of new evidence in the time period of 2013 to 2023, examining findings from the firm’s most recent Global 2,000 study to better understand what drives shareholder returns. Their latest findings bolster the case for programmatic M&A. But beyond doing more deals, what gives programmatic acquirers an edge – and how does their dealmaking translate to value creation?


Among them: Sustained acquisitions. “Programmatic M&A is pushing M&A activity to new levels across the HCM space,” said Mr. Crook. “It is now seen as a crucial lever for sophisticated industry leaders seeking enduring levels of outperformance over the next decade,” he said.

‘We Haven’t Been Busier’

Powering the consolidation trend in one important HCM market segment – executive search – are the acquisition targets themselves. In a recent Hunt Scanlon poll, 51 percent of search firms said they are planning to explore M&A solutions over the next 24 months.

At the same time, PE firms and strategic buyers have been calling Mr. Crook seeking acquisition targets ranging in size from $2-5 million in EBITDA to one firm seeking investments in the $25 million-plus EBITDA range. One Hunt Scanlon client has retained the firm to roll-up as many as 10 targets.

“We haven’t been busier,” said Mr. Crook, who noted that Hunt Scanlon has 24 firms in its pipeline at various stages of the M&A process. “We will close a dozen deals this year and we are more than fully subscribed as we start to think about what lies ahead in 2025.”

Deal Pipeline

Among its deal pipeline are recruiting firms in more than a dozen industry and functional specializations; several AI-enabled talent solutions providers; a culture assessment leader; several executive coaching platforms, and interim firms.

Related: M&A Dealmakers Intensify Focus On Founders’ Background Checks To Help Mitigate Risk

“Our buyer pool now includes a long list of large strategic acquirers and 10 PE investors seeking a toehold in HCM,” said Mr. Crook. “The sector, generally, is hot and these offerings, with more stable and recurring revenue streams, give acquirers more resiliency to macroeconomic headwinds. They recognize that,” said Mr. Crook.

Still, everyone is sensitive to a sharp drop in the economy, said Mr. Crook. But with that risk receding every month he said he believes an M&A recovery is underway for the broader markets.

Recent data from PitchBook seems to support that view. In the first quarter of 2024, North America’s M&A landscape held despite the persistently challenging dealmaking conditions, concluded PitchBook in its recent analysis. The total M&A value for Q1 totaled $464.1 billion, marking a robust increase of 9.7 percent year-over-year. Deal volume, another indicator of a healthy market, showed some light softness, according to PitchBook. The quarter recorded 4,204 deals, reflecting a decline of two percent year-over-year.

Looking ahead, the potential for lower rates later in 2024, contingent on moderating inflation data, instills optimism for a potential rebound in deal activity in the second half of the year, said the PitchBook report. Stay tuned.

Reprinted from with permission from ExitUp!

Contributed by Scott A. Scanlon, Co-CEO, Cody Crook, Managing Director and Head of Investment Strategy – Hunt Scanlon Ventures

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