After 2023’s all-time low for M&A (as a % of GDP) followed by a middling year in 2024, 2025 is finally showing nascent signs of a more full-throttled comeback. Just within the past week, there’s been Rocket’s acquisition of Redfin, Unilever selling off €1B in underperforming food brands, and reports of planned acquisitions by ServiceNow, Google, Wonder, and Allianz, among others. While Jan 2025 was muted – chilled in part by the geopolitical uncertainty – analysts and advisors are generally forecasting higher dealmaking activity in 2025. In one survey from Jan 2025, 58% of US CEOs said they were planning on M&A this year – up from 42% in Sep 2024.

If a resurgence does unfold, among the driving factors will be expectations of a loosened antitrust policy under the Trump administration, AI-driven strategic imperatives, and assets available from struggling businesses. The potential acquirers include players in private equity (PE), power, tech/AI, biotech, and food and beverage, among other sectors. The targets, however, will be different depending on whether motivations are purely financial vs. strategic. Many PE firms are eyeing business services or fixed-income plays, while strategic acquirers tend to be looking for targets that are more IP/tech-based or small-scale strategic footholds (e.g. high-protein snacks).

Andrew Ferguson, Trump's newly appointed Federal Trade Commission (FTC) chair, recently told big-bank and large-company CEOs in a closed-door meeting that the new FTC would not let deals "die on the vine." He went on to say that the FTC would “get the hell out of the way” as long as the deal would not hurt Americans economically. While the new FTC plans to retain the Biden administration’s broadened merger guidelines and vigorously enforce the law – including continuing the FTC’s cases against big tech – industry watchers expect the FTC to pick and choose its battles and focus on the ones that it can win. Ferguson has pointed at tech and healthcare as areas in focus for the FTC.

A large chunk of the ongoing M&A activity is oriented around AI. For instance, ServiceNow is acquiring agentic AI firm Moveworks for $2.9B to put Moveworks’ AI assistant on the front-end of its IT operations and service management offerings. Automation software firm UiPath is acquiring startup Peak mainly for its vertical AI applications. Food-delivery firm Wonder is acquiring content company Tastemade as part of its grand plans to become an AI-powered app that can automatically order personalized meals for users. HP acquired part of struggling AI pin startup Humane for $116M to hire its AI engineers. Some well-funded AI startups are using acquisitions to accelerate their trajectory, such as Gleamer in AI-powered radiology.

Some of the M&A activity appears to be more opportunistic. Investors and companies are finding reasonably priced deals for struggling businesses and their attractive assets. Pokémon Go owner Niantic Labs is selling its game division to Saudi-owned Scopely for $3.5B after failing to replicate Pokémon Go’s success. Bluebird Bio’s cell therapy spinout 2seventy bio was sold to Bristol Myers for $286M after losing most of its market value. Some troubled companies are opting for mergers, like opioid drugmakers Mallinckrodt and Endo. The Information has catalogued 92 software firms that are “ripe for acquisition” based on the timing of their last funding. Even established brands like Roomba maker iRobot and outdoor stove maker Solo Brands are concerned about their ability to remain a going concern in the face of rising competition and falling revenue.

Disruption brings change, and both challenge and opportunity in its wake. Trump’s tariffs and the broader geopolitical uncertainty are causing some M&A deals to be sidelined. On the other hand, a lighter regulatory hand could unlock smaller-scale acquisitions by tech firms, which slowed under ex-FTC chair Lina Khan. A shakeout is also just starting to get underway in AI, opening up new strategic pathways for acquirers and targets.

Nov 15 2024 (3 Shifts): Trump's new regulators and M&A

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