Mergers and Acquisitions Poised for a Comeback
Wall Street bankers are optimistic about a resurgence in mergers and acquisitions (M&A) this year, which is expected to boost overall investment banking activity. Although it may take some time for deals to materialize, industry experts predict that buyouts, including bank deals, will gain momentum in the second half of 2025.
Regional Banks Expected to Drive Activity
Avinash Mehrotra, Co-Head of M&A Americas at Goldman Sachs, believes that the regional bank space, comprising banks with under $100 billion in assets, will be the most active. He notes that regulators are likely to welcome more competition, which could lead to the emergence of one or two more banks with over a trillion dollars in assets.
Pent-Up Demand Drives M&A Activity
David MacGown, Managing Director at Barclays, attributes the recent surge in M&A activity to pent-up demand following a couple of years of market turmoil. He cites a host of reasons, including less sponsor activity and skewed ratios, which have led to a backlog of deals waiting to be done. MacGown notes that while there are more deals in the market now, executing them remains a challenge.
Private Equity Capital Waiting to be Deployed
Jeffrey Levine, Global Co-Head of Financial Services at Houlihan Lokey, points out that more capital has been raised in the last three years than in the history of private equity. However, this capital has yet to be deployed, largely due to a mismatch between buying and selling driven by interest rate and credit conditions. Levine notes that this scenario is shifting, and his firm is already seeing more activity in the markets, with more deals coming into the market in 2025 than in the last two years.
A Promising Outlook for Investment Banking
As the M&A landscape continues to evolve, industry experts are confident that 2025 will be a promising year for investment banking. With regional banks expected to drive activity and pent-up demand driving M&A deals, the stage is set for a resurgence in investment banking activity.
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