All signs point to 2025 being the year M&A bounces back.
High levels of uncertainty during 2023-24 led to a major slowdown in M&A activity, as geopolitical instability, unpredictable interest rates, and stubbornly high inflation made sponsors and lenders more cautious. Adding to this, many world powers, including the U.S., held elections in 2024. Notably, countries representing ~50% of the world’s population elected new leaders. This significant wave of political uncertainty across the globe further contributed to a substantial slowdown in M&A both in the U.S. and internationally.
Much of the uncertainty that plagued this past year has settled. Growth rates and market dynamics in most industries have stabilized, interest rates have ticked down, U.S. regulations are expected to loosen (given the election outcomes), and there’s more risk tolerance. Sponsors have plenty of cash to invest; private equity’s dry powder reached a record $2.6T in 2024. With a backlog of deals and bankers willing to lend, the table is set for a spike in dealmaking activity.
In 2025, M&A will be a major path to achieve growth, drive efficiency, and capture new market opportunities. But it requires careful strategic planning, rigorous execution, and a deep understanding of the complexities involved. If you are considering M&A as a path to growth this year, consider the following essential steps to maximize outcomes:
1. Sharpen your strategy
Develop a robust and adaptable strategic framework that considers potential market shifts, competitive pressures, and regulatory dynamics. Pressure-test the strategy with an objective, fact-based view to ensure alignment with overall business goals and the evolving landscape. Next, it’s time to gameboard: Proactively anticipate how competitors may respond to your strategy, and plan effective countermoves so your company has a better chance of maintaining an advantage.
2. Chart your trajectory
Clearly articulate your long-term growth objectives and assess how M&A can effectively contribute. Is M&A the optimal route to achieving your specific targets (e.g., market expansion, product diversification, or technological advancement)? If the answer is yes, it’s time to develop a list of potential targets and prioritize them based on attractive characteristics, such as strategic value, financial performance, ease of integration, or complementary culture.
3. Prepare to buy or sell
M&A transactions require meticulous preparation across business units. Ensure all relevant departments, including finance, legal, HR, and IT, are adequately prepared and equipped to support the M&A process. Build a strong internal team with the necessary expertise and experience to manage every aspect of the transaction effectively. If your company is lacking in internal resources, HighPoint has supported many transactions over the past 20 years and can help. The better prepared you are, the higher the chance of success in closing the deal and capturing value more quickly.
4. It’s go time!
Once you’ve identified an ideal target, conducting thorough due diligence that tests your investment thesis is essential. Take time to assess the target’s finances, operating model, and potential risks, focusing on what truly matters. Negotiate terms that create value and align interests. Develop and execute practical divestiture or comprehensive post-merger integration plans that minimize disruption and maximize synergies. Remember, successful M&A isn’t just about closing the deal; it’s about ensuring the transaction leads to increased value for both entities.
The upcoming surge in M&A activity presents exciting opportunities for growth and transformation. As you prepare your team, don’t forget there is still a day-to-day business to run. Most employees will focus on daily operations, but some may need to focus solely on the transaction. Assess if you need outside talent to augment your M&A team.
If your company doesn’t have the requisite expertise to pursue strategic M&A, hiring a consultancy like HighPoint Associates can help you get started. Our team of practical strategists with insider credentials understands how to establish priorities and guide decision alignment on impactful M&A. Contact HighPoint Associates today to kick off the conversation.
For more insights, read Get Beyond the Bidding War With a Proactive M&A Strategy by HighPoint Project Leader, Larry Maher. It’s a powerful piece on getting the most value out of M&A with a bottom-up approach.
RICARDO BERNER is an HPA team member with over 25 years of experience combining top-tier consulting experience with executive leadership expertise. Ricardo has extensive experience working on M&A, PMI, restructuring, cost reduction, growth strategy, and operational efforts. Over the past decade, Ricardo has led his own ventures, held interim CEO positions as well as advised PE clients, business owners, and C-level executives to accelerate growth and profitability. Previously, Ricardo was Managing Director for WM Partners and a Principal for Bain & Company.
