October 24, 2024
M&A Outlook: AI & PE are the Big Stories for 2025 Dealmaking
According to Dykema’s “20th Annual M&A Outlook Survey”, the big stories for 2025 are the burgeoning use of AI in the deal process and an expectation that private equity will lead a resurgence in deals next year. Here are some of the survey’s significant findings:
– Nearly seven in 10 dealmakers believe PE investors will drive M&A growth in 2025, as firms look to deploy $2.5 trillion in available capital, despite recent challenges such as lower valuations and reduced deal activity.
– AI is transforming industries and rapidly becoming a key deal driver. Nearly three-quarters find that companies are seeking to integrate AI capabilities, acquire businesses leveraging the technology, and use it to streamline M&A processes.
– 77% of dealmakers feel that regulators have increased their scrutiny of M&A deals. As a result, 80% have increased their emphasis on due diligence in the past 12 months.
– Over half of respondents believe the automotive M&A market will strengthen in the next 12 months, driven by a shift to hybrid engines, the need to increase supply chain resiliency, and collaboration between automakers/suppliers and technology providers.
– ESG’s influence on dealmaking is fading, with only 55% of respondents prioritizing it in target selection—down from last year—and one-third now saying they are unlikely to screen for ESG risks, compared to 19% in 2023.
– Similar to results from the 2023 report, respondents anticipate the healthcare, energy, and financial services industries to see the most M&A activity in 2025.
– John Jenkins