Global M&A Activity Expected to Weaken Until After US Elections

Global mergers and acquisitions (M&A) activity is reportedly expected to slow in the fourth quarter due to uncertainty around the U.S. elections before picking up again in 2025.

Companies are putting off large deals until after the elections, when a new administration will be selected and they will have a better idea of its likely regulatory and economic policies, Reuters reported Thursday (Sept. 26).

They also want to avoid becoming a “campaign talking point,” as happened when Nippon Steel launched a bid for U.S. Steel, according to the report.

Federal Reserve rate cuts are also expected to contribute to an increase in dealmaking next year, per the report.

Private equity buyouts are forecast to pick up as well, driven by lower interest rates and by the capital these firms have on hand and a limited amount of time to invest, according to the report.

So far this, year, U.S. M&A activity has been lagging behind other regions. As of Wednesday (Sept. 25), U.S. M&A volume in 2024 was down 8%, while Asia-Pacific was up 54% and Europe was up 7%, the report said, citing data from Dealogic. Overall, global M&A volume was up 14%.

The report attributed the decline in activity in the U.S. to ups and downs in the stock market, regulatory scrutiny and interest rates.

Regulatory pressures have especially affected “megadeals” worth more than $25 billion, and no transactions with an equity value of $50 billion or more have been signed so far this year, according to the report.

It was reported in August that M&A activity remained slow during the second quarter because the Federal Reserve was keeping interest rates high, making it tougher to finance deals.

At that point, the number of M&A deals had been below 10,000 for each of the previous four quarters, and transaction values were down too.

It was also reported in August that regional banks were actively pursuing mergers and acquisitions to strengthen their balance sheets and enhance their competitiveness in the face of challenges posed by elevated interest rates, increased competition for deposits and losses on commercial real estate loans.