• Global transaction values hit $3.1 trillion in 2024, up 16%. Central banks’ rate cuts and strong equity markets spurred activity.

• Trump’s presidency could bolster or hinder growth, according to experts.

•  Activist investors push for portfolio simplification. Companies face mounting pressure to offload underperforming units or risk becoming targets.

• Large M&A deals loom in 2025 as strategic players are eyeing transformational transactions across banking, tech, and consumer sectors.

After two years of declining deal values, mergers and acquisitions bankers have found their footing in 2024. Global transaction values rose 16% to $3.1 trillion, bolstered by interest rate cuts and a return to normalcy post-pandemic, according to a Bloomberg analysis.

Cheaper borrowing costs and robust equity markets have given companies the confidence to pursue deals. 

“You can feel the buzz around the office, deal conversations have picked up and the tone has changed. It’s been happening even in the last 10 days,” said Ehren Stenzler, co-founder and managing partner of advisory firm LionTree LLC. “You’re also seeing some of the really large-cap conversations. Deals that were not perceived to be actionable two months ago are back on the radar again.”

• Major transactions, including Mars Inc.’s $35.5 billion acquisition of snack maker Kellanova, signaled renewed momentum. 

• Other significant deals this year included Capital One’s proposed takeover of Discover Financial Services ($34.4 billion)  and Synopsys’ acquisition of Ansys Inc ($33.4 billion).

Upcoming Administration Policies: Boom or Brake?

With Donald Trump set to return to the White House, bankers are debating whether his policies will accelerate or temper M&A activity. Corporate tax cuts and deregulation could create a pro-growth environment.

“The table is pretty much set for a robust 2025,” said Dan Grabos, who runs Americas M&A at Barclays Plc in New York. “We’re past the US election and there’s underlying optimism that we’re going to be in a pro-growth, less-regulation environment. I think we’re going to continue to see transactions across the spectrum — from transformational deals of $10 billion plus and more midcap activity.”

• However, Trump’s protectionist stance poses risks. Tariffs could reignite inflation, forcing rate hikes that would stifle dealmaking.

• For European firms, Trump’s policies may necessitate acquisitions of U.S. companies to mitigate tariff impacts.

“The election of Donald Trump is a threat and an opportunity for M&A activity,” said Matthieu Pigasse, Paris-based partner at Centerview Partners LLC. “The very reason why he’s an opportunity is because he’s also a threat.”

Strategic Shifts and Activist Pressure

Companies across sectors have been divesting non-core assets to streamline operations, fueling spinoffs and asset sales. European giants like Sanofi, Unilever, and BASF led the way, shedding underperforming units.

• Activist investors are also turning up the heat, using M&A as a tool for change. Honeywell International is considering a breakup after Elliott Investment Management acquired a $5 billion stake.

• “Activists, most of the time, need multiple ways to win. Now we’re in an environment where they have multiple potential tools at their disposal,” said Pamela Codo-Lotti, global chief operating officer of activism and shareholder advisory at Goldman Sachs Group Inc. “They can target operational improvements, portfolio simplification, M&A, and also return of capital.”

2025: Big Deals on the Horizon

Bankers expect major transactions in 2025, with unresolved deals and new opportunities taking center stage.

• Europe: UniCredit’s pursuit of Commerzbank could trigger a wave of banking consolidation.

• Asia: Seven & i Holdings faces a $46 billion takeover bid from Canada’s Alimentation Couche-Tard.

• U.S.: Companies like Intel and Hershey have reportedly attracted interest from potential buyers.

“Looking to 2025, we expect companies across a diverse mix of sectors to look to use large M&A to strengthen and reposition their portfolios for their next phase of growth,” said Mark McMaster, global head of M&A at Lazard Inc. “Strategic players are likely to remain the dominant force for M&A activity.”

Cautious Optimism

While 2024 saw a welcome rebound, it remains one of the slowest years for dealmaking in a decade. Bankers remain wary of overconfidence.

“The general mindset is to think of the booming wave of dealmaking in 2021 as where we need to go back to,” said Alison Harding-Jones, global M&A head at Deutsche Bank AG. “The reality is that this is not what normal volumes look like. We’re optimistic as the general environment is improving, but getting deals done remains hard.”