Dealmakers see M&A rebound in 2025 as Trump returns to power
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By far, the most significant reason for hope, dealmakers say, is Donald Trump’s US election victory and the likely return of deregulation.
PHOTO: REUTERS
NEW YORK - By most measures, 2024 was a year of fits and starts for mergers and acquisitions (M&A), especially compared with a year ago. And initial public offerings were a flat-out dud.
For corporate dealmakers, there are plenty of reasons to hope that 2025 will be better, including a potentially more business-friendly White House and Congress, investor ebullience and a relatively strong US economy. But there are also factors that may keep them on edge.
2024 was mixed for dealmaking
Heading into 2024, bankers and lawyers said that the overall mood in corporate boardrooms was cautious, given geopolitical uncertainties and questions about the vitality of the global economy.
Deal activity ultimately reflected that. Although the US dollar volume of deals announced in 2024 as at Dec 20 rose 9 per cent year on year, to US$3 trillion (S$4 trillion), the number of transactions fell 18 per cent, to 46,534, according to data from the London Stock Exchange Group. That is the lowest level since 2015 and worse than 2020, which was afflicted by the coronavirus pandemic.
While a handful of large corporate buyers were willing to take a chance on M&A, would-be acquirers more broadly were feeling cautious. The biggest takeover bids announced in 2024 included:
Alimentation Couche-Tard’s US$58 billion offer for Seven & i Holdings, the Japanese operator of the 7-Eleven chain.
Capital One’s US$35 billion deal to buy Discover Financial Services.
Mars’ roughly US$36 billion acquisition of Kellanova, maker of Pop-Tarts.
(A potential point of comfort is that the biggest transactions covered a broad area of industries, including retail, financial services and technology.)
Among advisers, the usual suspects – Goldman Sachs, Morgan Stanley and JPMorgan Chase & Co. – claimed the biggest share of M&A activity, collectively participating in nearly US$2.3 trillion worth of transactions.
A resurgence in investment banking helped push shares in all three to record levels this autumn. And Evercore, an independent investment bank, beat out bigger rivals such as Barclays and UBS with US$266.5 billion worth of advisory assignments.
Despite bull market for S&P 500, 2024 was year to forget for IPOs
Some 1,167 companies went public in the year, raising US$110.6 billion. That is down about 9.5 per cent by number and 1.6 per cent by fund-raising volume.
Although some issuers were willing to brave sometimes choppy markets – top-performing initial public offerings included those of Lineage, a real estate investment trust, and Reddit, a social media company – investor caution prompted many would-be market debutantes to wait.
Things already looking up for 2025
Interest rates have come down in the US and other major markets, as central banks take stock of relatively favourable declines in inflation.
That has lowered the cost of financing, an especially important consideration for private equity firms.
By far, the most significant reason for hope, dealmakers say, is Donald Trump’s election victory and the likely return of deregulation.
The US President-elect has managed to reassure corporate leaders and their advisers that he will probably go easier on M&A than the Biden administration, notably with his picks of Ms Gail Slater to lead the Justice Department’s antitrust division and Mr Andrew Ferguson to head the Federal Trade Commission.
And for IPOs, there is a backlog of prominent names that could list in 2025, including Shein, China’s fast-fashion giant, and Klarna, a payment processor.
Private equity and venture capital firms have been closely watching for signs of an IPO comeback as a way to finally cash out on long-held investments.
But there are also areas of concern
Corporate leaders have been anxious about whether Trump will follow through on his threats to impose wide-ranging tariffs, which could drastically raise prices and lead to global trade battles even with close allies.
And then there is the prospect of chaos in Washington, despite Republicans set to regain control of both the White House and Congress.
The fierce warfare over federal government funding, and some Republicans’ willingness to buck Trump (and Mr Elon Musk, his influential adviser) on key priorities such as raising the debt ceiling are reintroducing the No. 1 thing that worries companies: uncertainty. NYTIMES
