The global M&A landscape is set for a year of dynamic change as macroeconomic disruptions continue to impact markets. Private equity (PE) investors must adapt to these shifting conditions, according to global management consultancy firm CIL.
The report highlights that while predictions for strong economic growth in the US range from 2.5% to 3%, these are tempered by the more protectionist policies under President-elect Donald Trump’s administration. This creates both opportunities and challenges for PE investors.
CIL forecasts an increase in deal activity next year, driven by a favourable interest rate environment that narrows valuation gaps and pressures teams to close deals efficiently.
CIL’s Investment 360 Index reveals the highest levels of confidence in the UK’s short-term economic outlook since its inception. Nearly half of the respondents express optimism about the next 12 months, buoyed by easing interest rates and stabilising inflation.
Similarly, CIL’s Mid-Market Pulse Check indicates a cautious but steady rebound in US deal activity, with expectations for moderate growth over the coming year.
“2025 feels like the start of a prolonged period of macro disruption. This word carries both positive and negative connotations, and I think we’ll see plenty of both. From Trump tariffs and generative AI to digitisation and societal shifts, these forces are reshaping the global business environment,” said Jon Whiteman, Managing Partner at CIL.
“PE tends to prefer stability, but despite the challenges, I expect deal activity to continue an upward trend through 2025. As interest rates improve, valuation gaps narrow, and deal teams face growing pressure to close transactions, we’ll see momentum build,” he continued.
CIL predicts that in this disruptive environment, the competition for top-tier deals will be intense, requiring PE firms to strike a balance between aggressive deal-making and thorough preparation. Businesses must ensure they are well-resourced to succeed.
Whiteman said: “Top-tier targets will be aggressively fought over, requiring PE to act fast and with conviction. At the same time, there will be a mix of quality in the market, and investors will need to work hard to identify the diamonds in the rough.”
Focusing specifically on the US, CIL predicts a mixed picture of success across sectors, driven by the new administration’s policy approach. This will push private equity firms towards a more measured approach, potentially adopting a ‘wait and see’ strategy.
“Private equity deal activity in the US is more likely to be influenced by sector-specific drivers, such as the need to generate returns and deploy dry powder, rather than macroeconomic conditions,” says Axel Leichum, Head of CIL’s North American operations.
There’s likely to be a greater preference for domestically focused businesses, which are less exposed to international supply chain and demand-side risks.”
