Opinions on 2025

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December 16, 2024

by a searcher from Northwestern University - Kellogg School of Management in Chicago, IL, USA

Curious if those in this community believe 2025 will be a busy year for LMM M&A.

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Reply by a searcher
from University of Nottingham in London, UK
^redacted‌ In the UK, I think we saw a pull-forward of deals from H1 2025 into H2 2024 due to the labour budget, which hit SMEs hard across personal and corporate tax, and company profitability (CGT, IHT and NICs). Sellers considering an exit were motivated to move quickly and we saw a rush of deals done in November. This was partly offset by lower consumer and business confidence over the second half of the year for the same reason, which impacted current trading for a lot of companies in different sectors and meant some business that wanted to trade didn't - they will be back. These factors may have knock-on effects into the new year. You are aware deployment remains difficult in PE LMM and mid-market, which means investors are starting smaller. I expect this trend to continue. I am still seeing a disconnect between buyer and seller expectations, which may start to soften as interest rates come down a little next year. For me, the fundamentals of the LMM market remain (ageing demographics, lack of succession planning, attractive smaller markets, fragmentation and inconsistent advisor coverage) and there are clearly active sellers across the market. I expect 2025 to be as tough as 2024, particularly in H1, so I think this requires focus (on markets, company criteria) and deal creativity to convince sellers to trade.
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Reply by a searcher
from University of Pennsylvania in New York, NY, USA
S&P Market Intelligence said that a consensus outlook on 2025 dealmaking has emerged from the latest round of earnings calls by the four largest publicly traded private equity firms: private equity-backed transaction activity, including exits, is likely to shift higher next year. It is hard to tell if this is market driven (likely partially) or them talking their own book (since their investors have been clamoring for a return of capital). Either way I think the tone toward dealmaking is much more positive since the election here in NYC.

Link: https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/the-big-four-s-2025-outlook-booming-pe-investment-in-eu-mining###-###-####
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