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    INVESTMENT BANKING | 3 POINT PERSPECTIVE | MACRO SHIFTS

    M&A extends its reach in 2025

    authorImage authorImage 
    Contributors: Dan Grabos & Stephen Pick
    16 Jan 2025

    After years of subdued M&A activity, the stage is set for robust dealmaking in 2025. Following the uptick in transactions in H2 2024, there is continued optimism about a shift to a pro-growth environment with less regulation. According to our Global M&A team, deal volumes could increase up to 15% year on year, driven by corporate ambition, increased sponsor activity and cross border activity.

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    1. Continued corporate activity

    2024 saw a sharp uptick in corporate divestitures, including a number of large spin-offs in the US as companies sought to simplify and streamline their portfolio, capitalise on secular trends, and rotate capital to increase returns.

    Last year also saw high levels of activist campaigns globally, with Strategy & Operations being the greatest demand. Activists are expected to continue their focus on M&A and operational failings in 2025, which contributes to corporate portfolio streamlining.

    Increased corporate activity is expected to continue this year, driven by intensifying pressure to deploy robust cash balances. As the Fed’s interest rate target falls to 3.75-4% by the end of 2025, cash will increasingly be a drag on earnings and lowering hurdle rates. The pursuit of growth, including through M&A, will accelerate into 2025.

    2. Increased sponsor activity

    Sponsor activity rose 21% in 2024, contributing to over a quarter of total M&A volumes. This represented the highest contribution by sponsors to overall M&A activity on record, save for 2021 and 2022. However, the activity has not been balanced, and our M&A team have seen a continued skew of sponsor activity to the buyside, which accelerated in 2024.

    Sponsor buyside activity will remain robust, driven by significant dry powder, constructive capital markets and falling rates, with sponsors expected to remain active in both private auction processes as well as public to private transactions (P2Ps).

    The overall growth in sponsor volumes in 2025, however, is expected to come from an uptick in sellside activity, with concentrated portfolio monetisations and a continuation of the trend towards bilateral or narrow sale processes rather than broad traditional auctions. This should lead to a more balanced level of activity in 2025.

    3. Cross-border deals will continue

    Robust cross-border M&A has been fuelled by corporates’ need for growth and access to broader investor bases.

    The US continues to be a prime destination, as a large and scalable market that offers opportunities for higher growth compared to other developed economies. Re-listing or dual-listing in the US also provides corporates with access to a deeper investor base as well as more extensive research coverage.

    There is optimism for dealmaking, deregulation and pro-business attitudes in the US. However, inbound cross border transactions may become more difficult depending on the Trump administration’s approach to policy areas including antitrust enforcement, tariffs and foreign trade regulations.

    In Europe, despite the cheap relative corporate valuations compared with the US, the volume of cross border deals from European companies into the US remains significantly higher than US companies into Europe.

    Despite robust outbound investment from Japan, the team expect to see subdued cross-border M&A activity from APAC compared with longer term averages as Chinese outbound investment, which was the driving force of APAC M&A activity for over a decade, has receded meaningfully. In 2016 Chinese outbound investment reached ~$200bn and this reduced to ~$30bn* in 2024. Inbound investment into Japan is the highest on record largely driven by a single large deal.

    Clear priorities driving action

    The increased momentum from the second half of 2024 is likely to continue this year, supported by strong capital markets and cross-border activity.

    Corporates will look to deploy cash balances and pursue mergers to drive growth, which is being prioritised over dividends and share repurchases. Likewise, following several years of muted activity, strong public market valuations and investor demand for returns should catalyse sell-side processes towards exit positions.



    *Source: Dealogic (January 2025). Note: Announced China cross border M&A volumes excludes intra-regional cross border flows. Data as of 31st December 2024.

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    About the experts

    Dan Grabos

    Head of Americas M&A and Co-Head of Industrials M&A

    Since July 2023, Mr. Grabos has been Head of Americas M&A. Prior to this role, Mr. Grabos joined Barclays in 2018 as Co-Head of Industrial M&A. Before Barclays, Mr. Grabos spent over 20 years at J.P. Morgan in both New York and London most recently in the M&A Group. Mr. Grabos received a Masters in Business Administration from Columbia University in New York and London Business School in London. Mr. Grabos received a Bachelor of Science from the Carroll School of Management, Boston College.

    Stephen Pick

    Head of EMEA M&A

    Stephen joined Barclays in July 2024 as Head of the M&A EMEA team. More than 15 years of M&A and corporate finance experience, including significant experience in power & utilities, infrastructure and mining. Prior to Barclays, Stephen worked in the M&A teams at Credit Suisse and Deutsche Bank, across both London and Sydney. Stephen has an honours degree in Law and Commerce from the University of Queensland and is a Chartered Accountant.

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