The pace of mergers and acquisitions (M&A) around the world has gained momentum this year, with a similar increase anticipated in 2025, according to Stephan Feldgoise and Mark Sorrell, co-heads of Goldman Sachs’ global M&A business.
Several factors have contributed to the rise in acquisitions, including declining borrowing costs, private equity sponsors returning capital to investors, and corporate repositioning through strategic dealmaking. The uncertainty surrounding major elections worldwide has led to increased market volatility, but deal activity has remained steady.
Private equity deals are expected to increase in 2025 as conditions become more solid. Historically, these deals have accounted for around 40% of the market, but recently, their share has been closer to 20-30%. Private equity firms are deploying capital at a rate closer to historical average, with most firms saying they’re on track or slightly ahead of plan.
The environment for private equity activity is becoming more favorable, with valuations conforming to a new paradigm. Private equity sponsors have had to adjust their models as interest rates decline and the market adjusts to new levels. The firms are also focusing on taking public companies private, which may lead to increased deal-making in 2025.
In contrast, transactions in China remain slow due to slower economic growth. However, other Asian markets such as India and Japan are expected to follow Europe’s trajectory. The US has benefited from perceived stability, energy supply, and onshoring of manufacturing and investment from the government, making it an attractive destination for companies looking to tap into its growth.
Healthcare M&A is expected to continue growing momentum in 2025, with technology and consumer firms also seeking growth through deal-making. Large energy companies are participating in a major wave of consolidation, driven by the need for scale across geography, products, financing, and balance sheet heft.
Source: https://www.goldmansachs.com/insights/articles/global-deal-making-is-expected-gain-momentum-in-2025