Dealmakers await Trump after bouncing back with $3trn haul

‘You can feel the buzz around the office, deal conversations have picked up and the tone has changed. It’s been happening even in the last 10 days,’ said Ehren Stenzler.

Mergers and acquisitions bankers got back on their feet in 2024 and are now waiting to see whether a second Donald Trump presidency will turbocharge or temper their nascent recovery.

Global transaction values have risen 16% this year to hit $3.1 trillion, according to data compiled by Bloomberg, as central banks have wrangled inflation and started to cut interest rates.

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Cheaper borrowing costs and strong equity markets have given some companies the confidence and capital to pursue deals, and others have been using the return of a more normal post-pandemic environment to simplify their businesses via asset sales and spinoffs.

A flurry of multibillion-dollar M&A in sectors like advertising, building materials and banking in recent weeks, along with private equity firms reopening their checkbooks to hunt for bargains in public markets in the US and Europe, is helping dealmakers generate some strong momentum heading into the new year.

“You can feel the buzz around the office, deal conversations have picked up and the tone has changed. It’s been happening even in the last 10 days,” said Ehren Stenzler, co-founder and managing partner of advisory firm LionTree LLC. “You’re also seeing some of the really large-cap conversations. Deals that were not perceived to be actionable two months ago are back on the radar again.”

There is a strong belief among investment bankers that Trump’s business agenda will fan the flames of the M&A recovery by freeing up more cash for acquisitions via corporate tax cuts and by lowering regulatory barriers to big deals across sectors.

“The table is pretty much set for a robust 2025,” said Dan Grabos, who runs Americas M&A at Barclays Plc in New York. “We’re past the US election and there’s underlying optimism that we’re going to be in a pro-growth, less-regulation environment. I think we’re going to continue to see transactions across the spectrum — from transformational deals of $10 billion plus and more midcap activity.”

But there is also concern that the incoming president’s plans for tariffs could re-stoke US inflation and the need for rate hikes. And the risks and rewards extend beyond the US, according to bankers.

“The election of Donald Trump is a threat and an opportunity for M&A activity,” Matthieu Pigasse, Paris-based partner at Centerview Partners LLC. “The very reason why he’s an opportunity is because he’s also a threat.”

In Europe, bankers say, companies may have to rethink operations to stay competitive, including by looking at acquiring US businesses to help mitigate the potential impact of any tariffs imposed on the EU.

“The decisiveness of the election of Donald Trump was a wake-up call for European companies,” said Benoit d’Angelin, founder and chief executive officer of London-based advisory firm d’Angelin & Co. “Now they can’t say that Trump is a temporary phenomenon. Protectionism — as well as Trumpism — might be more structural than we initially thought.”

Road to recovery

Even amid the uncertainty leading up to the US Presidential election in November, dealmakers had begun to find their feet again after two consecutive years of falling deal values.

The biggest deal announced in 2024 arrived during a busy summer period, when Mars Inc. agreed to buy snack maker Kellanova for nearly $36 billion including debt. This was one of three transactions valued at more than $30 billion to be struck this year, following Capital One Financial Corp.’s proposed takeover of rival Discover Financial Services and chip designer Synopsys Inc.’s agreement to buy software developer Ansys Inc.

“We would expect the regulatory environment under a Trump administration to be more favorable,” Tom Miles, global co-head of M&A at Morgan Stanley, said about the prospect of larger deals on the horizon. “That should allow companies that were hesitant to evaluate larger, more transformational mergers to dust off those files and help revive that part of the market.”

Elsewhere, companies have been taking steps to cast aside units that have been weighing on, or distracting from, the performance on core business lines. There have been hundreds of billions of dollars worth of spinoffs and asset sales this year, especially in Europe from the likes of health-care company Sanofi SA, consumer group Unilever Plc and chemicals producer BASF SE.

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Those companies that haven’t taken such steps could find themselves targets of activist investors, which have started to launch more campaigns with an M&A thesis after largely focusing on operational improvements and leadership changes in recent years. Honeywell International Inc. is now considering a potential breakup after Bloomberg News reported in November that Elliott Investment Management had built a $5 billion-plus position in the industrial giant.

“Activists, most of the time, need multiple ways to win. Now we’re in an environment where they have multiple potential tools at their disposal,” said Pamela Codo-Lotti, global chief operating officer of activism and shareholder advisory at Goldman Sachs Group Inc. “They can target operational improvements, portfolio simplification, M&A, and also return of capital.”

There’s already the prospect of big M&A on the horizon in 2025, with some unresolved deal situations set to bleed into the new year.

In Europe, Italian lender UniCredit SpA, under its deal-hungry CEO Andrea Orcel, continues to pursue a takeover of Germany’s Commerzbank AG; a deal could spark a long-awaited consolidation wave in European banking. In Asia, the future ownership of Seven & i Holdings Co. is uncertain as the Japanese convenience store operator’s management looks to counter a ¥7.1 trillion ($46.1 billion) offer from Canada’s Alimentation Couche-Tard Inc. And in the US, iconic names like chipmaker Intel Corp. and chocolate maker Hershey Co. have drawn takeover interest.

“Looking to 2025, we expect companies across a diverse mix of sectors to look to use large M&A to strengthen and reposition their portfolios for their next phase of growth,” said Mark McMaster, global head of M&A at Lazard Inc. “Strategic players are likely to remain the dominant force for M&A activity.”

Alison Harding-Jones, global head of M&A at Deutsche Bank AG, at Bloomberg’s inaugural Women, Money and Power conference in London on December 10

To be sure, while deal volumes are up year-over-year and a busy end to the year has come just in time for bonus season, 2024 will still end with one of the smallest deal hauls of the past decade, the Bloomberg-compiled data show. Against that backdrop, some senior bankers are wary of overconfidence and are reluctant to predict an imminent return to the boom times.

“The general mindset is to think of the booming wave of dealmaking in 2021 as where we need to go back to,” said Alison Harding-Jones, global M&A head at Deutsche Bank AG. “The reality is that this is not what normal volumes look like. We’re optimistic as the general environment is improving, but getting deals done remains hard.”

© 2024 Bloomberg

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