Datacentre M&A deals reach record highs in 2024 fuelled by GenAI demand

Generative AI (GenAI) is being cited as the reason why the value of mergers and acquisitions (M&A) in the global datacentre market hit a record high in 2024, with private equity firms responsible for the majority of the deals done.

Figures released by Synergy Research Group show that a record-breaking $57bn of M&A deals were closed during 2024, which is up $5bn from the previous high recorded in 2022.

That year, incidentally, was when two of the biggest M&A deals in the datacentre industry’s history took place, which were each valued at more than $11bn.

“The four largest deals ever were each valued at $10bn or more and closed in 2021 and 2022,” said Synergy, in a research note. “These were the acquisitions of CyrusOne, Switch, CoreSite and QTS – who all feature in the worldwide top 15 ranking of colocation operators.”

Where 2024 is concerned, the two biggest deals that closed during this 12-month period involved two separate equity investments in colocation provider Vantage Data Centers, which were collectively valued at $9.2bn.

The company also, across additional deals, received $3.1bn in equity investment to support its operations in the Europe, Middle East and Africa (EMEA) region.

At the time of writing, Synergy said there is another $29bn of M&A deals that have been agreed, but not formally closed, as well as an additional “possible” $15bn in deals that could also come to fruition over the coming year.

Synergy said it has tracked a total of 1,498 datacentre M&A deals since 2015 with an aggregate value of $300bn, with the majority of them involving a company acquisition of some kind.

However, it also includes minority equity investments, joint ventures, acquisitions of individual datacentres, share sales and land purchases for datacentre developments in its M&A tally.

“Apart from the rapid rise in overall datacentre M&A activity over the 10-year period, the most notable feature has been the extent to which private equity has flooded into the market,” said Synergy. “In 2020, private equity accounted for 54% of the value of closed deals, rising to 65% in 2021, and since then it has remained in the 80-90% range.”

John Dinsdale, chief analyst at Synergy Research Group, said that, in previous years, much of the M&A activity seen within the datacentre market had been driving by the demand for cloud services, social networking sites and digital services aimed at consumers and enterprises.

“There is no end in sight to this trend, with generative AI technology and services adding a further boost to already strong demand,” added Dinsdales.

“Specialist datacentre operators have either not been able or were not prepared to fund those investments themselves, while private equity investors have been more than willing to step in and fund growth initiatives. Looking at pending deals and the future pipeline, there is plenty of evidence to suggest that 2025 will be another boom year for data center M&A.”

This is the third in a series of pieces of research Synergy has published recently that pinpoint GenAI as having a transformative impact on the datacentre market. For instance, the organisation published figures last week that showed the average size of a hyperscale datacentre is increasing due to the compute-heavy demands of GenAI workloads.

Its research also revealed that sales of datacentre hardware and software had hit record highs in 2024 because of operators rushing to kit out their facilities and make them AI-ready.