Looking Back at Mergers and Acquisitions in 2024 + What’s Next for 2025

The dramatic swings in merger and acquisition activity over the past three years have left investors and business owners wondering what's next.

After reaching record highs in 2021, the market cooled throughout 2022 and into most of 2024. Rising interest rates and economic jitters kept many deals on ice. But the final months of 2024 brought a welcome change: inflation eased, rates stabilized, and deal activity began picking up steam.

The question is, will this momentum continue into 2025?

While we can’t predict the future with certainty, several factors do suggest a significant recovery in the merger and acquisition space. Here’s what’s driving our optimism.

Companies Have Strong Cash Reserves

From 2022-2024, economic uncertainty and high interest rates caused many companies to hold onto their cash and build up substantial reserves. Now that interest rates are dropping and inflation is cooling, prospective buyers are motivated to put this money to work through business acquisition services. With corporate cash reserves at record highs and anticipated interest rate cuts, businesses are well-positioned to capitalize on favorable financing conditions in 2025, enhancing their ability to pursue M&A opportunities.

Private Equity Firms are Ready to Invest

With significant cash reserves, private equity firms, too, are under pressure to invest idle money. In 2025, we expect PE firms to take advantage of lower interest rates and find creative ways to structure deals, including teaming up with other firms and using new financing approaches. This presents a unique opportunity for founder-owned companies to exit their company as they now represent 56% of all U.S. PE buyouts, signaling the trend of private equity firms moving toward more innovative and sustainable investment strategies.

The Economy is Stabilizing

Buyers don’t necessarily need a booming economy to make deals. They do need enough predictability to plan ahead, though. In terms of economic stability, 2025 looks promising. Inflation is cooling, employment remains strong, wage pressures are stabilizing, and further interest rate cuts are expected.

Companies Are Investing in Tech

Keeping up with evolving technology, particularly AI, cloud computing, automation, and cybersecurity, is no longer optional.

Instead of developing that technology internally, many companies are choosing to acquire companies that already have it. Why? Buying companies who already have this technology is often cheaper, faster, and more effective than building them from scratch—especially when you consider how quickly technology is advancing.

Optimism and Preparation

In 2023 and 2024, M&A transactions became more complicated and unique as costs of capital and scrutiny from lenders increased. As a result of this, both acquisition activity, financing, and capital expenditure spending slowed down. With the outlook of continued rate cuts, both financial and strategic buyers are optimistic about the M&A outlook for 2025 and are positioning themselves to take advantage of it. As the marketplace anticipates becoming more competitive, both buyers and sellers are focusing on their preparation efforts including navigating regulatory and efficiency issues, improving financial performance, and reshaping strategic goals, looking to acquire as an avenue for growth.

Make 2025 The Year You Make Your Move

2025 presents unique opportunities in the mergers and acquisitions landscape, but navigating it requires expertise. At True North Mergers & Acquisitions, we track these trends and help clients leverage them. Our deep understanding of regulatory requirements, deal structuring, and market dynamics can help position your transaction for success.

Ready to get started? Connect with True North Mergers & Acquisitions President Michael Hubsmith today.