News Digest: PE Megadeals Jump in 2024
January 23, 2025
News Digest:
Private equity megadeals made a strong comeback in 2024, with 18 deals valued at $5 billion or more, more than double the number in 2023. This surge reflects improving M&A conditions and pressure on firms to deploy their substantial dry powder.
The largest deal was Novo Holdings’ $16.3 billion acquisition of drug manufacturer Catalent. This resurgence in megadeals contributed to a nearly 25% year-over-year increase in the total value of PE-backed M&A in 2024. Analysts attribute this positive trend to improving dealmaker sentiment as interest rates stabilized and valuations became more agreeable.
Dry powder, the industry’s term for uninvested capital, decreased slightly to $2.51 trillion by December 2024, signaling increased pressure to invest. The technology sector led the megadeal activity with seven transactions, followed by the financials sector with four. Notably, nine of these deals targeted companies in the US and Canada, while Europe saw eight, driven by strong take-private activity, particularly in the UK.
A unique trend in 2024 was the “go-private-again” phenomenon, where previously public, venture-backed companies like Squarespace, Smartsheet, and Nuvei were taken private by PE firms. This suggests a shift in public market investor preferences towards profitability, prompting companies to seek private market transformations before potentially returning to the public markets. Looking ahead to 2025, predictions point towards a further increase in PE dealmaking due to substantial dry powder, anticipated interest rate cuts, and growing investor confidence.