M&A seen slowing ahead of US elections after uneven third quarter

By Anirban Sen

NEW YORK (Reuters) – Dealmakers are bracing for a slowdown in global mergers and acquisitions in the fourth quarter as companies postpone pursuing big targets ahead of the U.S. elections, hoping this will only be a temporary setback before a rebound next year.

Following are comments from investment bankers and M&A lawyers on the near-term outlook for dealmaking:

TOM MILES, GLOBAL CO-HEAD OF M&A, MORGAN STANLEY

“We haven’t seen any $50 billion-plus deals. If you look in history, you usually see a good number of larger transactions. And that does move deal volume up. If that’s the measure, the lack of $50 billion-plus deals does affect the volume number that people reference. It is clear that the lack of larger deals is a direct result of the regulatory pressures that exist. It’s hard to get a $50 billion deal done in any sector. Energy had a few of them over the course of the last couple years, but you haven’t seen many very large transactions in sectors like healthcare and tech.

“The number of $1 billion to $10 (billion) or even $10 billion-plus deals is pretty strong. This has not been a slow year in that regard. The corporates have done a good number of deals in that $1 billion to $10 billion and $10 billion to $20 billion area and that’s been an active market. People are saying that the market isn’t very strong, but truth is that it’s been active, and corporates are continuing to deploy capital into M&A.”

ERIC TOKAT, CO-PRESIDENT OF INVESTMENT BANKING, CENTERVIEW PARTNERS

“I do anticipate 2025 to be a robust year for M&A. There’s quite a bit of activity across the board. The question is which ones turn into actual large deals, but we do see quite a bit of momentum. When I look at the deal pipeline today, we are more optimistic and more positive than negative, versus what we were looking at a couple of quarters ago.”

JAY HOFMANN, CO-HEAD OF M&A, NORTH AMERICA, JPMORGAN

“Companies are looking to do big, creative deals, but will only pull the trigger over the next couple of months if there is low risk… We’re still in an environment where buyers want to transact down the middle of the fairway from a strategic rationale point of view.”

FRANK AQUILA, SENIOR M&A PARTNER, SULLIVAN & CROMWELL

“There is a much greater level of activity with M&A being a much higher corporate priority for many clients. This is largely because the U.S. should continue to have good economy – not necessarily the very strongest economy, but certainly not a weak economy – over the next year. As a result, boards and managements are not very concerned about a recession in the near term. Couple that with interest rate cuts, and you certainly are looking at the right environment for deals.

“There is a high likelihood that we will see European and Japanese companies focused on doing acquisitions in the U.S. They recognize that there is the potential for much greater revenue and profit growth in the U.S. over the next several years than in their home markets. We will see other cross-border activity, but particularly inbound M&A in the U.S. is going to be a focus. I think that we will see further consolidations in certain sectors, such as healthcare, financial services and tech. Given these signs, it all bodes well for the final quarter of 2024. But more than that, it really is a signal we’re going to see a very strong start to 2025.”

ADAM EMMERICH, CO-CHAIR OF WACHTELL LIPTON’S CORPORATE DEPARTMENT

“I don’t think people are very clear on what either (the Republican presidential candidate Donald Trump or Democratic rival Kamala Harris) administration would mean for various different aspects of the regulatory picture. The majority of deals signing up now would be closing in a new administration.”

EAMON BRABAZON, CO-HEAD OF EMEA M&A, BANK OF AMERICA

“There’s been a real expansion in both deal velocity and deal type. The full toolbox is being used, and that’s a good sign.

Over the next couple of years, the expectation is that we will see an above trend level of sponsor exits, possibly exceeding prior historical peaks.”