2024 M&A Market Insights: Impact of Accumulated Dry Powder and Fundraising Trends

According to recent reporting by S&P Global, dry powder (or unused cash reserves in the M&A market) has accumulated at an accelerated rate in 2024, even as the outlook on deal-making was greatly optimistic at the start of the year. As optimism on deal-making has waned, global private equity and venture capital funds now hold $2.62 trillion of total uncommitted capital as of July 10. The large amount of dry powder is driven by inflation and interest rate spikes that started in 2022 and have continued to the present day.

Furthermore, fundraising significantly decreased over the course of 2023 and early 2024, hitting a six-year low. While mega funds were able to maintain their previous fundraising levels, firms in lower tiers struggled to hit their targets. Current fundraising conditions are predicted to continue until the end of the year. With large amounts of dry powder and lower fundraising levels, the expectation is that funds will start using cash reserves for deals that are attractive in the future.