Dive Brief:

• The generative artificial intelligence boom is already having a major impact on companies’ merger-and-acquisition dealmaking strategies, according to a recent survey by KPMG.
• About eight in 10 dealmakers responding to the poll said that GenAI has had some effect on their M&A activity, with nearly half saying their strategy involves buying GenAI technology or products, according to a report on the findings. Forty-two percent of respondents said their organization is focused on using GenAI to support the M&A deal process. A smaller number (21%) said they are interested in striking deals to acquire GenAI talent.
• “GenAI is not just a buzzword, it's a reality that deal makers need to embrace and understand,” Dean Bell, market activation leader for deal advisory and strategy at KPMG US, said in an emailed statement. “GenAI can help them identify new sources of value, optimize their deal processes, and enhance their decision making. But it also poses significant risks, such as regulatory scrutiny, ethical dilemmas, and cyber threats.”

Dive Insight:

The global value of M&A activity in the first half of 2024 was $1 trillion, up 4% compared with the year-earlier period but below the 10-year average of $1.5 trillion, according to a report by Boston Consulting Group.

“The ongoing push for digitization — now fueled by the latest developments in AI — remains a primary driver of deals,” the report said. “We expect acquisitions that focus on technological capabilities and solutions to motivate many transactions in the coming years.”

Almost six in 10 dealmakers expect their next deal to happen this year, according to the KPMG research. Four in 10 say it will happen in 2025.

High interest rates and rate uncertainty are the biggest perceived hurdles for future deals, but overall concern about these factors has dropped from last year, pointing to an increased acceptance of this scenario as being the “new normal” for dealmaking, the report said.

A majority of dealmakers (64%) said either a 0.25% or 0.5% cut in rates would drive their deal volume to a level consistent with prior peak periods, while 25% indicated that a quarter point cut would do it versus 39% saying a half point cut.

The majority (64%) of dealmakers said that only a 0.25% or 0.5% decrease would drive more deal volume.

KPMG conducted a June survey of 200 U.S. business leaders who regularly participate in M&A decisions.