In an otherwise down year for global M&A deal activity thus far, some industries—like energy and biotechnology—have made headlines for their deals, which defy the trends seen in the global M&A market.
As we head into 2024, look for certain industry sectors and some of their subsectors to likewise diverge from the global market and see increased deal activity, while others tackle a prolonged slowdown in dealmaking.
Recent Industry Sector M&A Performances
The top five target industry sectors by global M&A deal volume for 2023 through Oct. 31 are:
- consumer, noncyclical ($453.4 billion);
- financial ($436.5 billion);
- energy ($333.1 billion);
- industrial ($264.0 billion); and
- technology ($253.1 billion).
Energy Sector
The energy, industrial, and tech sectors saw quarter-over-quarter deal volume increases this year through Q3, but energy will likely finish the year on top, based on its performance in Q4 thus far.
The energy sector was in fifth place for deal volume at the end of Q3 but rose two places by the end of October, thanks to two mega deals announced in Q4, which pushed energy’s deal volume past those for industrial and technology in the year-to-date rankings.
Of course, it’s possible that the rankings will change by the end of the year—2019, 2020, and 2022 saw shifts in Q4 deal volumes that shuffled the positions for the top five industry sectors at the close of the year. In the last five years, 2019 saw the most reshuffling among the top target industries from the end of Q3 to year’s end.
If 2023’s year-to-date rankings don’t change, energy will finish the year in the top five target industry sectors for the first time since 2018. Notably, the Q4 deal volume for target companies in the energy industry sector has already surpassed its Q3 totals, thanks in large part to Exxon Mobil Corp.’s announced takeover of Pioneer Natural Resources Co., and Chevron Corp.’s announced acquisition of Hess Corp.
Industrial, Tech Sectors
The energy target industry sector isn’t the only one to keep an eye on through the end of 2023 and heading into the new year.
In contrast to the pattern seen in the global M&A market (which saw deal volumes drop from Q2 to Q3), deal volumes for target companies in the industrial and technology sectors have steadily increased from Q1 to Q3. If target companies in these two sectors see the traditional Q3-to-Q4 increase in deal activity, and if they push to close transactions before the end of the year, then these two sectors may see a continued increase in deal volumes in the fourth quarter.
Additionally, with the meteoric rise of generative artificial intelligence this year, target companies in the technology industry sector with expertise or new developments in this area may be attractive targets for mergers and acquisitions in 2024.
Oil & Gas Poised to Dethrone Software
Bloomberg data divide each industry sector into more specific industry groups. As of Nov. 1, deal volumes for target companies in the oil and gas target industry group hold the top spot. While this wasn’t the case at the end of Q3, the two mega deals announced at the onset of Q4 pushed this group to the front of the pack.
Software, real estate investment trusts (REITs), commercial services, and biotechnology round out the list of the top five target industry groups year to date.
Until Q4 2022, software was the top target industry group by deal volume for eight straight quarters and nine of the 10 prior quarters overall.
REITs took the top spot in Q4 2022, and biotechnology had the largest quarterly deal volume in Q1 2023. Software reclaimed its top spot in Q2 and Q3 2023, but the oil and gas industry group—which has seen increases in deal volumes each quarter this year—is set to dethrone software in Q4 2023.
Though the chances that oil and gas companies will announce another mega deal in 2023 seem slim, the pending mega deals may encourage companies in this industry group—or the energy sector more broadly—to compete with the newer, larger companies (if those mega deals close) by pursuing M&A deals of their own in 2024 and further into the future.
Growing Momentum for These Groups
Drilling down into the data shows that several other target industry groups—software, internet, telecommunications, and pharmaceuticals—have bucked global M&A trends so far this year, with quarterly increases in their deal volumes.
These target industry groups may see deal volumes continue to increase heading into 2024, and the momentum generated through the end of 2023 may push companies to consider mergers or acquisitions with target companies in these groups.
A sprinkling of target industry sectors and several of their subsets may be primed for increased deal activity in 2024, but keep an eye on geopolitical, regulatory, and tech developments that may take the wind out of some industries’ dealmaking sails.
Access additional analyses from our Bloomberg Law 2024 series here, covering trends in Litigation, Transactions & Contracts, Artificial Intelligence, Regulatory & Compliance, and the Practice of Law.
Bloomberg Law subscribers can find related content on our M&A Deal Analytics resource.
If you’re reading this on the Bloomberg Terminal, please run BLAW OUT <GO> in order to access the hyperlinked content, or click here to view the web version of this article.
To contact the reporter on this story:
To contact the editor responsible for this story:
Learn more about Bloomberg Law or Log In to keep reading:
See Breaking News in Context
Bloomberg Law provides trusted coverage of current events enhanced with legal analysis.
Already a subscriber?
Log in to keep reading or access research tools and resources.