Analysts and bankers are predicting that the mergers and acquisitions (M&A) market in 2025 could experience a transformation, influenced by factors such as Donald Trump’s reelection in the United States, a slow post-Covid recovery, uncertainty regarding world events and more.
At the same time, the high prices of European energy, low economic growth and the aging of the European and American populations are all factors that could have a significant influence in 2025 in the field of cross-border mergers and acquisitions.
On the other hand, a potential lowering of interest rates and potential reduction of the tax burden at the American level could lead to more extraordinary financial operations such as mergers or acquisitions, SPACs and IPOs. These phenomena could lead to a greater propensity for investment by strategic and financial investors.
Some industry leaders expect that private equity funds will employ more resources in the M&A sector, thus focusing on the allocation of capital to stable and consolidated economic realities rather than investing resources in startups with an indefinite future. It should be reiterated that the main purpose of private equity funds and investment funds in general is precisely that of generating and creating added value in the shortest possible period.
As for the niches where the greatest changes are expected at the M&A level, I think it is important to highlight the following trends:
Technology
Investment funds have focused more on technology and software companies in recent decades because these sectors have proven to generate high returns for investors globally. I’ve noticed this phenomenon has been characteristic of the last 20-30 years at a global level.
Now for the next decade, humanity will find itself confronted with a further digital transformation that will likely lead to greater investments in artificial intelligence and the development and improvement of AI technologies in synergy with the optimization of cloud computing and cybersecurity.
Healthcare
With public spending and the demand for healthcare increasing, I expect further developments of biotechnological innovations, with further acquisitions in the healthcare sector and the development and improvement of telemedicine and improvement of pharmaceutical products.
Energy
Improvements in technologies and systems related to the development of renewable energy and carbon capture technology are expected in the future. At the global political level, as awareness of climate change and the depletion of fossil fuels has increased, the transition to sustainable energy sources has become a global priority for many.
I expect investments in projects and development of renewable technologies, such as solar, wind, hydroelectric and geothermal energy, to increase, also thanks to the reduction of duties and the development of technology and a decrease in the prices associated with it.
In the next decade, I also expect energy efficiency to increase and production costs of renewable technologies to decrease. Investments in research and development, together with favorable government policies, could stimulate the creation of new technological solutions. For example, solar panels are becoming increasingly efficient thanks to innovation in materials and production techniques. Likewise, wind energy is gaining traction with larger and more efficient turbines that can generate power even in lighter winds.
Automotive
With new government mandates in some areas to use electric motors over traditional engines, I’m predicting substantial investments in the sustainable transportation sector. More investment in electric vehicle infrastructure, battery technology and autonomous vehicle development could also drive more deals.
Financial Services
With the euphoria in the U.S. market regarding the intensification and development of blockchain, crypto and digital finance, more consolidation is expected in the banking and fintech sectors.
What This Means For Business Leaders
The implications of M&A transactions are of significant importance to business leaders.
Therefore, a thorough understanding of these transactions can contribute to more effective decision-making. It is critical that decision makers evaluate M&A transactions in conjunction with potential consolidation initiatives, such as cost optimization, market share expansion and product offering enhancements.
In general, M&A transactions present both opportunities and challenges for businesses and entrepreneurs. Those seeking to grow their businesses should carefully consider how any mergers or acquisitions align with their long-term strategic vision.