M&A 2025: the market can float above the sound and fury

Donald Trump’s return to the Oval Office ensures it will be a bumpy ride but the outlook for the M&A market in 2025 is still robust, the annual Bayes forecasting panel concluded this week.

The panel of senior industry figures noted that the market enjoyed a robust recovery last year, with a 14% rise in deal value to $3.6 trillion. Early indications are that interest in deals is set to continue globally, with EMEA (Europe, Middle East and Africa) leading the way.

With the annual panel discussion taking place on Monday evening – just as the US president was agreeing last minute deferrals of his threatened 25% tariffs on both Mexico and Canada – geopolitics inevitably featured heavily in the discussion.

The annual ‘lookahead’ is hosted by Bayes Mergers & Acquisitions Research Centre.

A market unchained?

The upside of the new administration in Washington, most panellists agreed, is a much more favourable regulatory environment – particularly in the US where, one observer suggested, a ‘seismic change’ in attitude is underway.

However, several panellists felt that President Trump’s return means geopolitical factors are likely to shape much M&A activity this year. This could include fewer cross border deals and a focus on securing supply chains and ‘strategic acquisitions’ that offer sanctuary from geopolitical turbulence – such as the threat of tariffs and trade wars.

Tech and healthcare, which accounted for 20% and 10% of deals by value last year, are again likely to be key drivers of market growth – with a particular focus on AI and life sciences. The energy transition is also likely to drive M&A activity with a focus on infrastructure and data centres.

Several panel members forecast a resurgence in private equity activity after several large funds returned large sums of cash to investors last year.

“Private equity is the most bullish sector on the deal-making landscape, with a trend towards mega deals,” one participant said.

The year will also see the continued rise of continuation funds as a source of liquidity to private equity investors, the audience of academics, students and external guests heard.

During a Q&A section, panellists responded to issues such as the troubles facing the German car industry – which may face fresh pressures in any EU-US trade war. One participant said this is likely to mean Germany will welcome Chinese investment in its car industry.

Role of AI

While acknowledging “we’re still in the early innings” of artificial intelligence, the panel agreed that market players are likely to use it to improve efficiency and gain competitive advantage. Noting the number of students in the audience, several said that while it may reduce demand for analysts, employers would be looking to employ people who have good relationship skills and can analyse deal mix.

One person cautioned there are ongoing concerns around AI security and confidential data in M&A deals – which underlines the importance of rigorous processes and controls.

Loan costs

While further interest rate cuts are likely, panel members agreed, central banks might be constrained by any inflationary pressures generated by new tariffs imposed by President Trump.

Susan Kilsby – who chaired the panel for the 15th and final time – said: “The questions from the audience underlined just what a fascinating time it is right now to be observing – or working in – the M&A sector. It was good that the panellists clearly see positive signs in the market despite the highly turbulent geopolitical backdrop.”

Panel members, who were speaking in a personal capacity, included:

• Ian Hart (UBS and former Director of The Takeover Panel)
• Cyril Auger (Ardian)
• Liz Claydon (KPMG)
• Matthew Wells (SS&C Intralinks) and
• John West (Mergermarket Group).

Professor Scott Moeller, director of the M&A Research Centre at Bayes, said: “We live in interesting times and that was certainly reflected in the discussion. I know that the students amongst the crowd of 150 people valued the insights provided – not least about the growth in many market segments driving a need for more M&A analysts and associates with AI making their likely future work more rewarding.”