INTRODUCTION Contributed by: Frank Aquila, Sullivan & Cromwell LLP
acting as a deterrent to global M&A transactions. Not only do geopolitical conflicts create the risk of sanctions and deal uncertainty (thereby driv - ing up transaction costs, including more robust diligence), but they are often accompanied by associated economic issues that discourage deal activity, such as widespread inflation and supply chain issues. Looking forward to 2025, continuing conflict and instability are likely in the Middle East and Ukraine, which may very well suppress certain M&A activity. To the extent any additional politi - cal tensions develop, such as those in connec - tion with the tariffs or regulatory enforcement discussed above, diminished M&A may be one unintended consequence. Concluding remarks Despite a number of years of lacklustre M&A activity, 2024 moved the needle in the correct direction with modest growth, and the market
seems well positioned to rebound altogether in 2025. With broad political shifts, both in the US and across the globe, M&A activity seemed primed to thrive, with favourable conditions including relaxed antitrust regulation, improved market conditions, pent-up PE demand and the expectation of continued interest rate cuts in the US by the Federal Reserve in the coming year. Nevertheless, these favourable factors may be undercut by some countervailing challenges, most notably unpredictable foreign investment regulation, trade wars and the imposition of new tariffs, and geopolitical tensions. On balance, the factors in favour of M&A in 2025 appear to outweigh the headwinds for an expect - ed active year for M&A spanning PE, strategic, domestic and cross-border deals. Although the year has had a slow start for deal making, it is still far too early to consider 2025 a failure – only time will tell whether optimistic expectations align with the reality for M&A activity.
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