M&A Execs Optimistic About Deal Activity in ‘25 — Evening Brief – 01.17.25
There is a significant sense of optimism regarding the expected impact of a second President-elect Donald Trump term on the M&A market. This sentiment reflects a broader expectation that Trump’s policies, particularly those focused on deregulation and tax cuts, may create an environment conducive to corporate transactions and investments.
According to the 2025 M&A Outlook Barometer released by M&A advisor SRS Acquiom, more than 70% of dealmaking professionals anticipate closing at least one transaction during the first half of 2025. This optimistic projection underscores growing momentum in M&A activity, supported by the findings of the mid-December survey, which polled over 100 industry professionals.
Nearly half of the respondents (49%) reported higher deal volume compared to the previous year, marking a 10-percentage point increase from the previous survey in 2024. About a third (29%) maintained consistent deal volume year-over-year, while a small segment, 5%, reported significant declines. Yhe survey also revealed that only 2% of respondents believe that a potential second term for Trump would significantly harm M&A activity
This surge in deal activity aligns with broader trends pointing toward increased optimism in the market, bolstered by factors such as improved economic conditions, more favorable regulatory environments, and rising confidence in business growth, with 93% of respondents predicting higher M&A volume in 2025. Of those, 78% anticipate moderate increases, while 15% foresee dramatic growth in activity. This represents a notable shift from the 2024 survey, where only 63% expected moderate growth, reflecting a growing confidence in the market.
The survey highlighted a positive trend not only in the volume of M&A activity but also in the size of transactions as 66% of respondents expect larger deal sizes than current levels, signaling confidence in both the market and the capital available for larger, more complex transactions.
While private equity activity has been constrained by extended hold periods and limited exits, there is optimism for improvement as 51% of professionals reported they are now pursuing more exits and acquisitions compared to the previous year. This marks a notable shift from the more cautious stance observed in recent years.
The survey acknowledged that while there is significant optimism for growth in M&A activity, stubbornly high interest rates remain a potential limiting factor. One-quarter (25%) of respondents identified these systemic economic concerns as the most impactful constraints on growth this year.
Despite the challenging fundraising environment in 2024, with many general partners (GPs) facing difficulties raising capital, the impact on M&A activity appears to be limited. Only 13% of M&A executives reported that LP pressures to return capital are having a significant effect.
The biggest factor driving M&A activity is the record levels of dry powder and pent-up demand for transactions, which was cited by 47% of respondents. Additionally, 32% of respondents mentioned that cost of capital and target valuations remain concerns
Financing conditions are expected to remain relatively favorable, with 54% of respondents predicting an increase in credit volume. However, this increase is anticipated to come with higher costs, reflecting the ongoing effects of elevated interest rates.
Additionally, 23% of respondents expect credit volume to rise substantially but with more reasonable terms, indicating some flexibility in the lending environment despite the higher cost of capital. Only 3% of executives believe credit will be difficult to obtain.