JPMorgan’s O’Donnell Predicts M&A Activity Increase in 2024 | Bloomberg

Catherine O’Donnell, recently appointed head of North America leveraged finance at JPMorgan Chase & Co., anticipates a resurgence in mergers and acquisitions (M&A) activity this year. O’Donnell shared her outlook at the JPM Leveraged Finance Conference in Miami Beach, according to a report from Bloomberg. This expectation comes after a period of relative stagnation in dealmaking, influenced by economic uncertainty and higher interest rates.

Navigating a Shifting Landscape for Deals

The leveraged finance market, which focuses on providing loans to companies with significant debt, is often a bellwether for broader M&A trends. O’Donnell’s comments suggest a growing confidence that conditions are improving for companies to pursue acquisitions and restructuring. JPMorgan’s move to place O’Donnell, a veteran of the firm, in this key role – announced in February 2026 – signals the bank’s own expectation of increased activity in this space. Reuters reported on the appointment February 18, 2026, noting the appointment was effective later in the month.

The slowdown in M&A activity over the past year has been well-documented. High interest rates made borrowing more expensive, increasing the cost of financing deals. Economic uncertainty, fueled by inflation and geopolitical risks, as well made companies more cautious about making large investments. Valuation gaps – the difference between what buyers are willing to pay and what sellers are asking – also proved a significant hurdle.

The Role of Interest Rates and Financing

A key factor driving O’Donnell’s optimism is the expectation that interest rates will stabilize or even decline in the coming months. The Federal Reserve has signaled a potential shift in monetary policy, which could lower borrowing costs and make deals more attractive. Lower rates would reduce the overall cost of financing for potential acquisitions, making it easier for companies to justify the investment. This is particularly relevant for leveraged buyouts, where a significant portion of the purchase price is financed with debt.

However, the availability of financing isn’t solely dependent on interest rates. Banks are also carefully assessing the creditworthiness of potential borrowers and the overall health of the economy. Lenders are likely to be more selective in their lending practices, focusing on companies with strong balance sheets and stable cash flows. The Investing.com report highlights O’Donnell’s extensive experience in navigating these complex financing environments.

Sector-Specific Opportunities and Challenges

Even as O’Donnell’s outlook is generally positive, certain sectors are expected to be more active than others. Industries that have been disrupted by technological change, such as retail and media, are likely to spot increased consolidation. Companies in these sectors may seek to acquire competitors or innovative startups to adapt to the changing landscape. The energy sector, particularly renewable energy, could also see a surge in M&A activity as companies invest in clean energy technologies.

Conversely, sectors that are facing significant regulatory scrutiny or economic headwinds may experience slower deal flow. For example, the technology sector has faced increased antitrust concerns, which could make it more difficult for large companies to pursue acquisitions. The healthcare sector is also grappling with rising costs and regulatory uncertainty, which could dampen M&A activity.

Impact on Private Equity

Private equity firms, which often rely on leveraged finance to fund their acquisitions, are also closely watching the evolving M&A landscape. These firms have been sitting on large amounts of dry powder – uninvested capital – and are eager to deploy it in attractive deals. A pickup in M&A activity would provide private equity firms with more opportunities to invest and generate returns for their investors. However, competition for deals is expected to be fierce, potentially driving up prices and reducing returns.

What to Expect in the Coming Months

Several key factors will shape the trajectory of M&A activity in the coming months. The Federal Reserve’s monetary policy decisions will be crucial, as will the overall health of the global economy. Geopolitical risks, such as the ongoing conflict in Ukraine and tensions in the South China Sea, could also weigh on investor sentiment.

Companies considering acquisitions or divestitures will demand to carefully assess these factors and develop a clear strategy. Valuation remains a critical consideration and both buyers and sellers will need to be realistic about pricing. Due diligence – the process of investigating a potential acquisition target – will also be more important than ever, as companies seek to mitigate risks and ensure a successful transaction.

Looking ahead, the expectation is that the M&A market will gradually recover as economic conditions improve and financing becomes more readily available. O’Donnell’s perspective, informed by her leadership role at JPMorgan, offers a valuable insight into the potential direction of this critical market. The pace of recovery will likely be uneven, with some sectors and regions experiencing more activity than others.

Procedural Next Steps: Companies actively exploring M&A opportunities are currently focused on preliminary due diligence and securing financing commitments. Formal deal announcements are expected to increase in the second and third quarters of 2026, contingent on economic conditions and regulatory approvals. Industry observers will be closely monitoring the volume and size of deals announced, as well as the financing terms and valuation multiples, to gauge the strength of the recovery.