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2025 M&A Outlook: Strategic Insights for Investment Banking Leadership

Strategic M&A Insights for Investment Banking Leadership

Key trends and opportunities as global dealmaking builds momentum for 2025

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Key Market Dynamics Reshaping Investment Banking

As M&A volumes rise and corporate priorities shift, investment banking leaders must position their teams to capitalize on emerging opportunities.

Corporate Priorities Shift

47% of surveyed clients believe strategic growth and new capabilities will drive 2025 M&A decisions—with that number reaching nearly 60% for private corporates.

Normalized Regulatory Environment

With key M&A bottlenecks addressed, CEO confidence is rising amid expectations that the new US administration will usher in more supportive regulatory policies.

Sponsor Liquidity Focus

Over 1,200 portfolio companies with $1B+ enterprise value are expected to exit via sale or IPO in the next 2-3 years, creating significant opportunities.

AI-Driven Transformation

The AI revolution is accelerating M&A across the Infrastructure-Platform-Application stack, with current activity concentrated at the Infrastructure and Platform layers.

Industry Shift in Dealmaking Activity

The M&A landscape is rebalancing from "old economy" sectors to growth-focused sectors in technology, consumer, and healthcare.

2023 2024 TMT Nat. Resources Industrial Healthcare Financial Consumer Real Estate 20% 25% 16% 15% 10% 8% 6% TMT Nat. Resources Industrial Healthcare Financial Consumer Real Estate 23% 21% 17% 11% 12% 9% 7% Each bar represents % of total M&A volume Key Trend: TMT sector growing from 20% to 23% while Natural Resources declined from 25% to 21%, reflecting shift from "old economy" to growth-focused sectors

Strategic Opportunity Areas for Investment Banks

Five key areas where investment banking leaders should focus their teams and resources to capitalize on emerging M&A trends.

Corporate Simplification Advisory

Large-cap companies ($25B+) are moving away from conglomerate models, with ~40% of announced and closed spin-offs in 2024 coming from this segment.

Banking Opportunity:

  • • Develop dedicated simplification advisory teams that understand cross-regional complexities
  • • Create expertise in post-separation M&A, as companies that engage in spin-offs have higher rates of subsequent dealmaking
  • • Partner with sponsors as carve-out facilitators to increase deal credibility

Sponsor Exit Facilitation

With DPI at the lowest levels since 2008 and over 1,200 portfolio companies valued at $1B+ expected to exit in the next 2-3 years, sponsors need creative solutions.

Banking Opportunity:

  • • Design innovative dual-track processes leveraging the 75% YoY increase in sponsor IPO volumes
  • • Develop expertise in continuation fund structures and minority stake sales
  • • Connect sponsors with strategic corporate buyers seeking capability-enhancing acquisitions

AI Transaction Expertise

The AI revolution is driving significant M&A activity across the Infrastructure-Platform-Application stack, with unprecedented infrastructure investments.

Banking Opportunity:

  • • Build specialized AI practice groups that understand the technical and strategic aspects of AI-driven M&A
  • • Develop valuation frameworks for AI-focused companies across the technology stack
  • • Identify non-technology companies seeking AI capabilities and pair them with suitable acquisition targets

Cross-Border Deal Facilitation

Cross-regional M&A is rebounding, with flows between the US and Europe showing the strongest momentum and APAC contributing ~30% of global transaction volumes.

Banking Opportunity:

  • • Strengthen global networks with specialized teams that understand regional regulatory frameworks
  • • Develop expertise in emerging markets like India, where M&A-friendly environments are attracting significant foreign capital
  • • Create capabilities to help clients navigate geopolitical tensions and valuation discrepancies across markets

Take-Private Opportunities

Take-privates remain an outsized contributor to sponsor M&A, rising +21% YoY and representing 30% of total sponsor buy-side volumes in 2024.

Banking Opportunity:

  • • Develop expertise in European markets, where take-private activity increased 34% YoY with the UK seeing an 84% surge
  • • Create sponsor matchmaking capabilities to pair sponsors with attractive public companies
  • • Build specialized financing teams to leverage the declining rate environment for take-private transactions

Key Strategic Implications for Investment Banking Leaders

How these market shifts create opportunities for repositioning investment banking capabilities and talent.

Capability Building Priorities

  • 01.

    Develop specialized AI transaction advisory teams that bridge the gap between technical AI knowledge and investment banking expertise

  • 02.

    Create dedicated sponsor exit solution practices focused on creative structures and dual-track processes

  • 03.

    Build cross-border dealmaking expertise, particularly for US-Europe and emerging APAC markets flows

  • 04.

    Expand corporate simplification and spin-off advisory capabilities with dedicated teams

Talent Acquisition Focus Areas

  • 01.

    Recruit bankers with AI/ML domain expertise who can effectively bridge technical understanding with strategic dealmaking

  • 02.

    Build teams with regulatory navigation expertise for the anticipated more supportive regulatory environment

  • 03.

    Hire professionals with sponsor relationship networks to capitalize on the growing need for innovative exit solutions

  • 04.

    Develop cross-cultural advisory teams that understand nuances of specific regional markets like Japan and India

Industry Insights