As we wrap up 2024 and look toward 2025, it’s not hard to spot reasons to be optimistic about mergers and acquisitions (M&A) in 2025. While still below historical levels, we’ve started seeing an increase in M&A in the second half of 2024. Globally, deals were up 12% in 2024 compared to the prior year, due largely to an increase in deal activity in the second half of the year. The United States, which accounts for nearly half of global M&A, saw a slightly better than 8% increase in M&A in 2024. And the value of private equity deals rose 25% globally in 2024.

What are the positive signs for 2025?

• Interest rates have declined, and debt markets are open, making it easier to finance deals.
• The incoming US administration is expected to be generally pro-business and less restrictive on antitrust policy.
• Private equity firms have a backlog of long-held investments that need to be brought to market.
• Stock price increases have given corporations additional firepower to use their stock for deals. US stocks, as measured by the S&P 500 index, are up approximately 25% in 2024.

The truth is that we can’t be sure M&A will continue to rebound in 2025. Risks remain, including geopolitical instability and the less business-friendly rhetoric from the incoming US administration (such as potential tariffs, restrictions on immigration, and anticipated scrutiny of big tech), but, if we’re making an educated guess about M&A in 2025, it is very likely to be a busy year in dealmaking. 

Declining interest rates and frothy markets should help bring corporate CEOs and private-equity firms, which drive a large portion of merger activity, back to the table. Lower rates make it more affordable to finance deals with debt while rising stock prices embolden corporate chiefs to use their shares as currency to fund deals.

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