What factors are influencing the global mergers and acquisitions market?
The global mergers and acquisitions (M&A) market is gaining momentum, which will be a good stimulus for growth. However, analysts are cautious about being overly optimistic. There are a number of risks that could affect the sector’s further development.
The market recovery started in 2024, as the statistics show:
– the total number of M&A deals in the global market reached 50,000 contracts;
– the volume of deals valued at US$1 billion or more increased by 17%;
– the number of small and medium-sized deals fell by 18%;
– the share of deals worth US$1bn or more is around 1%.
Analysts cite several factors that are driving M&A activity. These include AI-driven business transformation, greater availability of capital and increased supply. Experts predict that promising companies, including private equity portfolio companies, will enter the market.
M&A market risks
Despite the upturn, the M&A market remains vulnerable to global challenges. Experts point to instability in global politics as a major pressure factor. Elections in the US and other countries have changed the global landscape and forced investors to be cautious.
The Fed and other government regulators have slowed their rate cuts, but long-term interest rates continue to rise. Such trends complicate the profit mechanism. They can also affect refinancing processes.
New US president policies increase risks in many sectors. Changes in trade strategy may contribute to higher inflation. The introduction of new tariffs will lead to changes in supply chains, which will also impact the financial sector. Another threat is migration legislation, which could lead to labour shortages. This in turn will influence the manufacturing, retail and healthcare sectors.
Opportunities for the sector
Bain & Company believes that the Trump administration’s innovations could have a positive impact on M&A value. Several sectors are at stake, including sustainable industries such as renewable energy. The latter will benefit significantly from consumption growth fuelled by the development of artificial intelligence (AI).
Innovative technologies will remain at the heart of the market. Software companies will be able to expand their capabilities by supporting the development of AI.
At the same time, demand for healthcare and pharmaceutical companies will increase. Deregulation, which will make it easier to scale operations, may provide an additional incentive.
In terms of market orientation, the focus will not only be on deals aimed at revenue growth. The parties are also interested in increasing margins and entering new markets. These trends are particularly evident in the banking, finance and insurance sectors.
