An insurance deal, an advertising deal, a major private credit purchase by Blackrock, even chocolate is getting in on the mergers and acquisitions push over the last few weeks. These are big transactions across multiple industries. As we move into 2025, this could be a major theme that helps broaden outperformance beyond the Mag-7 stocks.
Goldman Sachs is looking for a much better environment for M&A with solid economic growth, looser financial conditions, more optimistic CEOs and a more business friendly administration. The chart below lays out Goldman’s forecast for 2025. They are forecasting 750 deals of $100 million or more, which would be a 25% increase over the roughly 600 deals in 2024.
Source: Goldman Sachs, as of 12/4/24
The private equity world is certainly ready for this surge in activity as there is roughly $2 trillion in cash looking for investments and significant pressure on PE firms to deploy that capital, while simultaneously pressure on older funds to liquidate and return capital. Additionally, publicly held companies should see a rebound in activity. It can’t really get lower with only about 1% of the S&P 500 companies by market cap bought over the last year.
Source: Deutsche Bank,, as of 12/4/24
The banking sector is one specific industry that could see major transaction volume. There are roughly 4000 banks in the US at this time, and according to Bob Diamond, a former chief executive at Barclays, that number could move to 2000 as smaller regional banks are consolidated. Bank M&A has been under pressure during the Biden administration but with increased costs over the last few years the industry is ripe to start consolidating again.
Source: Goldman Sachs, as of 9/25/24
Since November 1st, the S&P 500 is up roughly 7%. But some of the public industries where M&A could really pick up have seen much stronger gains. Small caps have gained close to 10%, regional banks close to 10% and speculative technology names up over 30% (as represented by the poster child here ARKK ETF). This might just be a taste of what is to come if the outlook for M&A comes true in 2025.
Sean Dillon, CMT, CFTe
SVP, Investment Strategy
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