2025 outlook for M&A in the US
Posted by | Alok Tayal
We recently engaged with a number of our investment banking clients to discuss their outlook for 2025. We were very interested to hear their perspectives on how they expect the new US administration to shape the economy and business, and how new policies might impact a range of industries.
In the following article I’ve endeavored to summarize and articulate the insights gained from my conversations with seasoned bankers, aiming to provide a comprehensive perspective on how these policy shifts might influence key sectors, while also examining the implications for mergers and acquisitions (M&A).
A brief overview
The new administration’s campaign heralds a new vision: protectionism, deregulation, and economic nationalism. With a focus on revitalizing domestic production, slashing corporate taxes, and reimagining trade agreements, these policies hold the promise of invigorating American industries while also introducing a complex mix of opportunities and challenges across key sectors like technology, energy, healthcare and manufacturing.
Industry impacts
Artificial Intelligence (AI)
AI continues its meteoric rise, and 2025 is shaping up to be another landmark year:
- Outlook: Focus on deregulation and economic policies may prioritize domestic technology investments while potentially imposing restrictions on foreign AI investments. These changes could redirect funding toward US-based AI firms, particularly in critical areas like semiconductors, data centers, and AI-powered applications.
- M&A activity: Investment in AI-related sectors, including infrastructure and platform layers, will likely continue. A shift toward application-layer AI solutions—such as generative AI and AI-powered automation—could drive a surge in strategic acquisitions as companies race to monetize AI capabilities.
Healthcare
The healthcare sector is likely to experience significant policy shifts particularly in areas like Medicaid, the Affordable Care Act (ACA), and healthcare technology.
Outlook:
- Healthcare: Efforts to repeal and replace the ACA suggest potential reforms or cuts to Medicaid and other healthcare programs. This could lead to a focus on privatized healthcare solutions and cost containment measures. Reduced government funding for public healthcare programs may increase financial pressure on hospitals and insurers, creating consolidation opportunities.
- Healthcare technology: The deployment of AI in healthcare is expected to accelerate, with applications in diagnostics, personalized medicine, and administrative automation. Government support for deregulation could pave the way for faster approval of AI-driven healthcare solutions and drugs.
- M&A activity: The convergence of healthcare and technology is set to drive deal activity. Acquisitions targeting telemedicine, healthcare IT, and wearable technology are likely as companies aim to meet growing consumer demand for convenience and personalization.
Energy
The energy sector stands at a crossroads under the new administration. While traditional energy sources like oil and gas are expected to gain, the renewable energy sector could face slower growth.
- Outlook:
- Traditional energy: Rollback of green regulations is poised to benefit fossil fuel industries, including coal, oil, and gas. These sectors may experience heightened M&A activity as companies seek to consolidate resources and expand infrastructure to meet increasing energy demands.
- Renewables: Despite the new administration’s skepticism of renewable energy, the sector is likely to grow—albeit at a slower pace compared to a more environmentally focused administration. Solar energy, for instance, remains on track for significant capacity additions, driven by private investment and international momentum.
- M&A activity: The lifting of the pause on LNG export permits is expected to spur consolidation in midstream and oilfield services firms. High energy demand from Europe, Asia, and US data centers further underscores the need for strategic partnerships.
Manufacturing
Manufacturing is central to the Government’s vision, with policies aimed at revitalizing domestic production.
- Outlook: Higher tariffs and reshoring incentives are expected to boost US-based manufacturing. Investments in infrastructure and defense projects will further drive demand for domestically produced goods. Despite these opportunities, manufacturers face headwinds such as rising raw material and labor costs, supply chain disruptions, and talent shortages. These factors may limit the full realization of the new administration’s manufacturing agenda.
- M&A activity: Deal activity in industrial manufacturing is anticipated to rise, particularly in the mid-market segment. Key areas of focus include automation, robotics, and digitization, as companies aim to modernize aging infrastructure and enhance efficiency.
Overall M&A outlook
The new administration is setting the stage for a thriving M&A landscape in 2025, brimming with opportunities and momentum. Here’s a glimpse of the exciting trends to watch:
- Private Equity on the Rise: A more lenient antitrust stance combined with reduced interest rates will empower private equity firms to tap into capital markets with ease, fueling dynamic leveraged buyouts and bold strategic investments.
- Sector-specific momentum: Beyond the ever-buzzing technology and energy sectors, industrial manufacturing is poised for a surge in M&A activity, driven by growing investor confidence and an increasing demand for cutting-edge technological innovations.
- AI-led transformation: The rapid expansion of AI applications will spark a wave of acquisitions focused on AI-powered automation and RPA solutions, revolutionizing industries and boosting operational efficiency.
Several of the big 5 management consulting firms and many financial institutions are optimistic and their forecasts underscore the dynamic dealmaking potential ignited by the administration’s pro-business policies. The deal market is poised for accelerated growth, with the small-to-mid market expected to account for a disproportionate number of transactions. For investors and businesses, understanding these shifting dynamics is critical to succeeding in 2025 and beyond. The anticipated rise in M&A activity reflects market optimism and adaptability in response to the new administration’s policies. Agility and strategic foresight will be essential to thriving in this evolving landscape.
At Fuld & Company, we help our investment banking and private equity clients navigate this evolving landscape. We recently assisted a private equity firm in identifying target industries/verticals and targets with strong growth potential by reviewing and screening relevant markets for untapped business opportunities, analyzing industry and competitive landscapes, and forecasting market sizes and growth trends considering upcoming regulatory changes. On the other hand, a mid-market investment bank is collaborating with us to proactively publish content that amplifies their brand in high-growth sectors to build exclusive deal flow.
Tags: 2025 M&A Outlook, AI and M&A Deals, Energy Sector Investments, Healthcare Industry M&A, Investment Banking Trends 2025, Private Equity Trends, US Economic Policy Impact