Reflecting on My 2025 M&A Predictions

Kicking off DrivingDealmaking, I’m revisiting the 2025 M&A predictions I made a year ago. Let’s explore both what I got right and what has surprised me over the year, in reflection.

In September 2024, I wrote the following:

"The availability of comparatively cheaper debt is likely to drive an uptick in M&A activity in 2025, creating significant opportunities for both dealmakers and commercial law firms.

Since August 2024, the Bank of England has reduced the base rate from 5.25% to 4.75%, aligning with a global trend of declining interest rates. These reductions have lowered borrowing costs, producing a comparatively favourable environment for dealmaking. For instance, the decline in interest rates has supported a rebound in the institutional syndicated loan market, improving access to financing. Notably, banks are now reclaiming market share from direct lenders, who dominated in recent years during the private credit boom.

Lower borrowing costs will enhance buy-side businesses’ ability to secure debt financing, likely driving an increase in leveraged acquisitions and buyouts. This likelihood is amplified by sponsors' record levels of dry powder, ensuring that they are well-positioned to deploy capital and boost deal activity. The likely surge in M&A volume will heighten demand for law firms' corporate practices, where lawyers will structure, negotiate, and facilitate transactions that have become more financially viable.

The increase in complex, high-value transactional work will bolster law firms' revenue, help strengthen their position in the global market, and create opportunities to develop new client relationships."

What I got right:

• The Bank of England’s rate cuts have reduced borrowing costs, which have notably supported an uptick in dealmaking. Cheaper debt has indeed made leveraged acquisitions more attractive, driving increased M&A volume and value.

Reflections:

• While activity increased in some sectors, the overall M&A surge hasn’t been as dramatic or uniform across the market as I expected. Geopolitical uncertainty and inflationary pressures, in particular, tempered global dealmaking.

Overall, my 2025 predictions weren’t far off in principle, but the pace of interest rate declines offered some surprises, especially in the US, where we’ve yet to see a meaningful cut. It’s a reminder that M&A markets, while influenced by macro trends, are never entirely predictable.