(Bloomberg) -- Mergers and acquisition activity rebounded in 2024, as access to cheaper financing released a pent-up demand to do deals after two down years.
Many in the markets believe the impending return of Donald Trump to the White House will help fan the flames of this recovery. But there’s a risk Trump’s economic policy could have the opposite effect by reigniting inflation.
We spoke with senior bankers to get their predictions for M&A across a range of sectors and regions in the coming 12 months. Here are some of their responses:
“Interestingly, 2024 was one of the best years on record for take-privates - more than $250 billion of activity globally. That shows that the private equity firms were still deploying capital and public shareholders were more willing sellers than private equity owners. We see that as set to continue and there should be an increase in private equity firms buying other private companies. Capital markets are strong and open and private equity funds are getting larger. I would not bet against a $20 billion take-private.”
Eamon Brabazon, co-head of global M&A, Bank of America Corp.
“The equity markets are in all-time high territory which is injecting M&A enthusiasm. There’s also a strong sense of confidence across US corporates that the market will be more accommodating, deal-friendly with less antitrust headwinds in the next couple of years. That’s providing a further catalyst to M&A.”
“More European companies are seeking to make acquisitions in the US that would allow them to have a manufacturing base over there and sell locally. Finding growth is not easy and many CEOs feel huge pressure to deliver... The UK is doing better than Europe. On a relative basis the outlook for the UK is a positive one. Any deal that touches Europe has a link to London.”
Mark McMaster, global head of M&A, Lazard Inc.
“While we have seen financial sponsor acquirers gain momentum as the future rate environment has improved, strategic players are likely to remain the dominant force for M&A activity. Over the last two years, strategic acquirers accounted for 70% of all M&A activity; that compares to only 60% in 2021-2022. Of the 25 largest deals announced in each of the last two years, strategic acquirers were behind 80% of them (2024) and 90% (2023). A noteworthy trend in the high-rate environment has been strategics using their stock as M&A currency, thus allowing them to build their portfolios and realize synergies without stretching their balance sheets. That could continue however, as borrowing costs come down, the market could also see big corporate cash deals.”
Stephen Pick, head of M&A for EMEA, Barclays Plc
On private equity:
“2025 will be an exit year for many private equity firms as the backlog of exit candidates has further increased in 2024. If you look at the proportion of sponsor buyside versus sellside activity, it has been increasingly skewed towards the buyside. Many private equity firms have tried to softly test the market in 2024 to see if there was appetite for their portfolio assets, but many sales processes haven’t properly launched.”
Anne Hiebler, global head of M&A, Credit Agricole
On deal drivers:
“There are still headwinds ahead such as lower growth in some sectors, deal complexity and increased duration between signing and closing as well as geopolitical instability and uncertainty in some countries, but overall we are going in the right direction. The bottom has been reached and the turning point is behind us. In 2025 the main deal driver is expected to be the actual company performance and Ebitda growth. Now that M&A financing is once again available, the implementation of strategic choices and exit decisions by private equity firms will essentially be driven by the underlying performance of an asset.”
William Mansfield, head of M&A in EMEA, Deutsche Bank
On challenges:
“M&A volumes should increase next year, but there are still a number of challenges ahead. Interest rates are not going down to zero, quality of earnings remains a question and geopolitics is still a complication. On a positive note, European companies have strong balance sheets and private equity [firms] have significant dry powder to deploy for M&A.”
Ehren Stenzler, co-founder and managing partner, LionTree LLC
On the deals ramp:
“Things are lining up for both strategic and PE activity to be increasing in 2025 which should drive a lot of volume. I’m not necessarily predicting 2025 is going to be a record year but I do think it’s a ramp up toward that. The confluence of financial sponsor activity, strategic activity in general, and a handful of mega transactions could lead to a very sizable year for 2025 and looking into 2026.”
Andrei Milekhin, global head of digital infrastructure investment banking, Nomura Holdings Inc.
On digital infrastructure:
“We’ll continue to see a high level of activity in the mid to long term, driven by the strong secular underlying trends, such as the increasing data consumption and the rise of AI. Data center assets will continue to be highly sought after, while we also expect a handful of large fiber network and tower transactions as these industries continue to consolidate.”
Athena Theodorou, managing director for EMEA technology investment banking, UBS Group AG
On technology dealmaking:
“M&A activity in European software sector will be more robust in 2025. Take-private deals will continue to flourish as sponsors are eager to find deals and the more benign funding environment also helps. I’ll expect there to be more cross-border software M&As next year as US companies are showing more interest in European assets. They have clear plans to expand internationally while the strong US dollar is giving them an impetus to do deals.”
Dan Bailey, co-head, global technology, digital and financial services, HSBC Holdings Plc
On Europe’s telecom sector:
“HSBC is bullish on the European telco sector in general, as capital expenditure on fibre roll-outs and 5G is slowing, driving rapid free cash flow growth. On the M&A front, we’re waiting to see if the regulators’ rhetoric of supporting constructive industry consolidation will be matched by their actions [and if] there will be any operator that’s willing to test it as part of a wider pan-European deal.”
Pamela Codo-Lotti, global chief operating officer of activism and shareholder advisory, Goldman Sachs Group Inc.
On activists becoming more like PE:
“The PE model is a model that a lot of activists are trying to replicate, but not many have been successful. Many activist hedge funds have investment horizons that are shorter than a typical PE, and getting into longer-term PE investments will therefore be an issue with their LPs. From a private equity standpoint, reputation matters and not many private equity players want to be seen as partnering with an activist that is going very aggressively after the target.”
Cong Hui, head of capital markets, CICC
On Hong Kong IPOs:
“IPO activity in Hong Kong will continue growing in 2025. Up to now, approximately 90 projects have passed the A1 review and are awaiting issuance. Notably, following the success of Midea’s A-to-H landmark IPO, many high-quality A-share companies are considering listing in Hong Kong.”
Peter Bowden, global head of industrial, energy and infrastructure investment banking, Jefferies Financial Group Inc.
On energy dealmaking:
“While there can be no guarantee that the major integrated companies will remain active in large-scale M&A, that possibility clearly exists. That said, on the margin we believe that it is more likely that 2025 dealmaking will come from the mini-majors and the large independents... Under a scenario where antitrust scrutiny is lessened under the new administration, we could see midstream combinations impacting market hubs such as Mont Belvieu that would not have historically been possible.”
James Wang, co-head of Asia ex-Japan ECM, Goldman Sachs
On China ECM:
“In 2025, the two powerful Asian ECM engines of India and China will be working. India has been breaking records this past year and there no reason to believe that won’t be the case again next year. China has picked up meaningfully in 2024 over 2023 and we see it continue to power forward.”
Nicolas Constant, Paris-based partner, Centerview Partners LLC
On French M&A:
“There’s a lack of visibility to support large corporate transactions in France. But the ongoing political crisis is unlikely to affect the outbound deal flow. It is a necessity for French companies to find growth in the US and the push towards overseas acquisitions will likely continue. Financing markets remain strong and for many French companies organic growth is just not enough to meet their strategic targets.”
Srinivas Balasubramanian, national head, corporate finance, KPMG India
On dealmaking in India:
“Whilst the IPO pipeline continues to remain vibrant, emerging weak economic indicators such as a high core CPI, liquidity crunch in the banking sector impacting credit offtake and finally a slowing consumption in urban households will have a direct impact on fund flows into our public markets. An under-performing INR, vis-a-vis a raging greenback, also dilutes any capital gains made by foreign investors. Considering this macro, it’s fair to assume that opportunistic acquisition themes in sectors such as consumer products, tech services, media, health care, select industrial and financial services will witness increased activity.”
--With assistance from Manuel Baigorri, Pamela Barbaglia, Dong Cao, David Carnevali, Vinicy Chan, Michelle F. Davis, Julia Fioretti, Baiju Kalesh, Crystal Tse and Stefani Reynolds.
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