Global Deal Volumes Set to Soar in 2025
A New Era of Mergers and Acquisitions
Bankers are predicting a surge in global deal volumes next year, with expectations that they will surpass $4 trillion, the highest in four years. This optimism is fueled by U.S. President-elect Donald Trump’s promises of less regulation, lower corporate taxes, and a broadly pro-business stance.
Recovery and Growth
The total value of mergers and acquisitions (M&A) has already seen a 15% increase from last year, reaching $3.45 trillion as of December 19. This recovery is attributed to a more deal-friendly antitrust enforcement in the U.S., which is expected to unshackle tie-ups that were put on hold under the previous administration.
Top Deal-Makers Weigh In
Jay Hofmann, co-head of M&A for North America at JPMorgan Chase, believes that next year could be one of the best in the last decade, with global M&A volumes potentially increasing by 15% or 20%. John Collins, global co-head of M&A at Morgan Stanley, notes that the improving IPO market will help private equity firms, who were previously unable to sell or list portfolio companies.
Private Equity Firms on the Rise
Leveraged buyout volumes have jumped 35% to $600.8 billion this year, as private equity firms braved challenging market conditions to take several companies private. Blackstone’s $16 billion acquisition of Australian data center operator AirTrunk and Silver Lake’s $13 billion take-private of entertainment conglomerate Endeavor Group ranked as the top LBOs of the year.
Tariffs and Inflation Concerns
Some investment bankers have warned that planned tariffs under the Trump presidency could drive up inflation, potentially hindering the U.S. economy. However, many believe that the benefits of a more deal-friendly environment will outweigh these concerns.
Large Deals Drive Volumes
The number of transactions worth over $10 billion has grown at a robust pace, with 37 deals valued at more than $10 billion announced this year. Mars’ $36 billion takeover of Cheez-It maker Kellanova, Capital One’s $35 billion deal for Discover Financial, and Synopsys’ $35 billion takeover of design software maker Ansys were among the largest M&A transactions of the year.
Boom Times Ahead
A booming U.S. economy, pent-up demand, and trillions of dollars of unspent capital sitting on corporate balance sheets are expected to result in more deal activity in the near term. Top investment banks are already ramping up hiring to ensure deal teams are fully staffed to handle the expected surge in transaction volumes.
Cross-Border M&A on the Rise
With the outlook for U.S. corporate earnings looking brighter, cross-border M&A activity is also expected to improve as cash-flush foreign buyers increasingly eye attractive U.S. targets. Fast-growing economies in Asia are also being viewed as attractive for opportunistic private equity firms.
Deal Advisers Weigh In
Deal advisers note that the rate of dealmaking heading into 2025 is starting to return to levels seen in the pre-pandemic years of 2018 and 2019, when deal volumes averaged about $4 trillion a year. A flurry of large deals have been announced in recent weeks, including Omnicom’s $13 billion merger with rival advertising giant Interpublic Group, and Arthur J Gallagher’s $13.4 billion takeover of insurance broker AssuredPartners.
Technology Sector Leads the Way
The technology sector accounted for the largest share of M&A activity this year, jumping more than 20% year-on-year to $534 billion globally. Mark Bekheit, global vice chair of the M&A practice at Latham & Watkins, notes that the types of deals being seen in the works are of the type that were fewer in number over the last couple of years, and there is a lot of excitement to do big, transformational deals.
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