By Michael J. De La Merced
Overall, 2024 was a year marked by inconsistency for mergers and acquisitions, especially in comparison to the previous year. Initial public offerings, on the other hand, were a complete disappointment.
For those involved in deal-making, there are numerous reasons to believe that 2025 could see improvements, such as a potentially more favorable environment from the White House and Congress, bullish investor sentiment, and a relatively robust U.S. economy. However, certain elements may continue to keep corporate deal-makers apprehensive.
The year revealed a mixed landscape for deal-making. As 2024 began, bankers and attorneys reported that the sentiment in company boardrooms was one of caution, largely due to geopolitical uncertainties and doubts regarding the strength of the global economy.
Ultimately, deal activity mirrored this sentiment. While the dollar value of deals announced in 2024 as of Friday increased by 9% year-over-year, reaching $3 trillion, the number of transactions dropped by 18%, falling to 46,534, based on data from the London Stock Exchange Group. This marks the lowest level since 2015, and it’s worse than the downturn seen in 2020 during the coronavirus pandemic.
Although a few major corporate buyers ventured into the M&A space, a broader sense of caution was observed among potential acquirers. The largest takeover attempts announced in 2024 included:
— Alimentation Couche-Tard’s $58 billion bid for Seven & i Holdings, the Japanese entity behind the 7-Eleven franchise.
— Capital One’s $35 billion agreement to acquire Discover Financial Services.
— Mars’ approximate $36 billion takeover of Kellanova, producer of Pop-Tarts.
(A potential silver lining is that the largest deals spanned a diverse range of sectors, including retail, financial services, and technology.)
Among advisors, the familiar names — Goldman Sachs, Morgan Stanley, and JPMorgan Chase & Co. — captured the largest share of M&A activity, jointly engaging in nearly $2.3 trillion of transactions. A revival in investment banking contributed to pushing shares in all three firms to all-time highs this fall. Additionally, Evercore, an independent investment bank, surpassed larger competitors like Barclays and UBS with $266.5 billion in advisory deals.
Despite a thriving market for the S&P 500, 2024 was a forgettable year for IPOs. Approximately 1,167 companies went public, generating $110.6 billion. This is a decline of about 9.5% in terms of quantity and 1.6% in fundraising totals.
While some issuers were willing to navigate occasionally turbulent markets — with high-performing IPOs from Lineage, a real estate investment trust, and Reddit, a social media platform — many prospective IPO candidates chose to delay their entries due to investor hesitance.
Looking ahead, 2025 seems more promising. Interest rates have decreased in the U.S. and other significant markets as central banks reassess the relatively favorable trends in inflation. This has reduced financing costs, which is notably crucial for private equity firms.
According to deal-makers, the most crucial reason for optimism is Donald Trump’s electoral success and the anticipated return of deregulation. The president-elect has succeeded in reassuring corporate executives and their advisors that he is likely to adopt a more lenient stance on M&A compared to the Biden administration, especially with his appointments of Gail Slater to direct the Justice Department’s antitrust division and Andrew Ferguson to lead the Federal Trade Commission.
Additionally, regarding IPOs, there is a queue of notable entities poised to list in 2025, including Shein, a giant in fast-fashion, and Klarna, a payment processing platform. Private equity and venture capital firms are closely monitoring possibilities for an IPO resurgence as a means of finally liquidating long-held investments.
Nevertheless, there are still concerns. Corporate leaders remain anxious about Trump’s potential follow-through on his promises to impose extensive tariffs, which could significantly inflate prices and ignite global trade conflicts even with close partners.
Moreover, there is the looming prospect of disorder in Washington, despite Republicans poised to reclaim leadership of both the White House and Congress. Intense disputes over federal government funding, along with some Republicans’ readiness to diverge from Trump (and his key adviser Elon Musk) on critical issues such as increasing the debt ceiling, are reintroducing the top concern that weighs on the minds of executives: uncertainty.
