The mergers and acquisitions (M&A) landscape is heating up and banks are bracing for a surge in dealmaking in 2025. Several factors are aligning to create favorable conditions, from lower interest rates to shifts in regulatory policies.
Here’s how banks are preparing for this potential boom and what it could mean in the year ahead.
The current state of M&A
M&A activity in 2024 was a mixed bag. Some deals were delayed, while others pressed ahead, driven by sector-specific opportunities. For instance, healthcare, asset sales and cross-border financing emerged as bright spots despite broader uncertainty.
Companies paused transactions to wait out the U.S. election and manage the bandwidth constraints caused by heavy deal flow earlier in the year. This temporary slowdown has created pent-up demand that could ignite significant activity in the months to come. Many deals that were put on hold earlier this year are now being revisited.
The U.S. election arguably sparked optimism for the M&A space. A business-friendly administration and expectations of a more accommodating regulatory environment give dealmakers confidence. Expectations for reduced red tape and corporate-friendlier tax policies could create the stable conditions necessary for businesses to pursue transformative deals.
This optimism is already evident on Datasite, which annually facilitates close to 15,000 new deals. New global deals tracked on Datasite jumped 22% year-over-year just two weeks after the election. That uptick suggests that dealmakers are already planning for an environment conducive to M&A growth.
More interest rate cuts ahead?
One of the most significant catalysts for M&A in 2025 could be the continued shift in monetary policy. Interest rate cuts are widely anticipated, which would lower borrowing costs to make financing large-scale deals more attractive.
Private equity firms and corporate buyers alike are expected to take advantage of these conditions to pursue strategic investments. This shift could also spur cross-border transactions, as global organizations seek to establish or expand U.S. operations to hedge against potential tariff changes.
What dealmakers are watching
Several factors will also shape how dealmakers position themselves as 2025 continues.
Businesses will be looking for signs on how quickly and decisively the new administration acts on its pro-business promises. Regulatory predictability is key, as companies are more likely to commit to deals in a stable environment.
Inflation trends and growth forecasts will play a role in shaping confidence levels. As markets stabilize, M&A momentum could accelerate, especially in sectors like healthcare and technology. In fact, new technology, media and telecommunications (TMT) deals on Datasite led the charge in the two weeks after the election compared to the same period a year ago, jumping 60% year-over-year.
Firms must also address resourcing issues that slowed dealmaking earlier in 2024. Streamlined processes and clear timelines will help deals close faster, ensuring opportunities are not missed. Using AI in M&A may help. From a productivity standpoint, successful M&A relies on the accurate processing of qualitative and quantitative data. For complex deals, this can be a time and resource intensive exercise for dealmakers. Most dealmakers recognize the benefits of using AI to improve M&A productivity, speeding up deal management by at least 50%, and global dealmakers plan to explore the use of new AI tools as their top area of operational focus next year.
How banks are preparing
Banks are already positioning themselves to capture opportunities as the M&A cycle rebounds by building relationships and working closely with companies to understand their strategic goals and help them identify targets or buyers.
They are also hiring top talent in key sectors like healthcare, technology and renewable energy, where deal activity is expected to surge, and they are investing in tools that streamline due diligence, valuation and integration.
With tariff policy changes making U.S. targets more appealing, banks are also likely bolstering their expertise in international transactions. Navigating cross-border regulations and structuring complex deals will be essential skills in the year ahead.
Looking ahead
As M&A activity picks up, banks can expect a fast-paced environment requiring agility and innovation. Key trends to watch include, sector-specific booms, potentially in healthcare, technology and energy as companies in these sectors seek strategic partnerships or consolidate market positions; increased competition; and evolving deal structures that include innovative financing solutions to meet diverse needs.
The groundwork being laid now will determine how well banks and their clients capitalize on the potential coming M&A wave.
Mark Williams is Chief Revenue Officer, Americas at Datasite.
