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Trump's policies expected to ease regulatory pressures on

M&A

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Private equity dry powder of $4 trillion expected to drive

buyouts

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Policy uncertainty and inflation pose potential M&A

challenges

By Anirban Sen, Echo Wang

NEW YORK, Dec 11 (Reuters) - Top Wall Street CEOs and

dealmakers are anticipating an uptick in larger mergers and

acquisitions under the incoming Trump administration, after such

megadeals evaporated this year due to a harsher regulatory

environment.

On Tuesday, Trump named Andrew Ferguson to replace Lina Khan as

the chair of the Federal Trade Commission, appointing a current

Republican member of the agency who has promised to ease up on

the policing of large tie-ups.

"There hasn't been a single deal over $40 billion in 2024

and if you go back in history, there are usually a handful of

them that are above $40 billion. The era of the large deal is

certainly not dead - and we would expect to see some of those

transactions come back in 2025," said Tom Miles, global head of

M&A at Morgan Stanley ( MS ), in a panel at the Reuters NEXT conference

in New York.

Wall Street executives have so far cheered the prospect of

business-friendly regulations and are anticipating a burst of

deals next year, as Donald Trump's return to the White House is

likely to significantly ease some regulatory pressures that

dealmakers faced under the Biden administration. On Tuesday,

Goldman Sachs CEO David Solomon said dealmaking in equities and

M&A could exceed 10-year averages next year.

In an early sign of increased optimism, more than $40 billion

worth of M&A transactions were announced in the U.S. on Monday,

including the $13 billion tie-up between Madison Avenue

advertising giants Omnicom ( OMC ) and InterPublic Group

.

"There is an expectation that Trump is going to perhaps

follow the Reagan era of the 1980s and he's going to go first on

(reducing) taxes, which will be a boost to corporate earnings.

The next step would be around tariffs, immigration policy, as

well as deregulation. So all of that really does provide

tailwinds to an economy that's already very strong," said Michal

Katz, Mizuho's Americas head of investment and corporate

banking.

While the near-term outlook for M&A activity has brightened

significantly, investment bankers and deals lawyers flagged the

impact of policy uncertainty, protectionism, and inflationary

pressures under Trump as potential headwinds for the business of

corporate dealmaking.

"When you look at the data, the number of second requests

and deals challenged under Trump in his first term is about the

same as it has been under Biden. But it's going to get better

going forward because if you look at what the Biden FTC and the

DOJ have done is they completely turned the antitrust process on

its head from the way it used to work," said Jim Langston, an

M&A partner at law firm Paul, Weiss, Rifkind, Wharton &

Garrison.

PRIVATE EQUITY BOOST

Further cuts in U.S. interest rates are expected to benefit

buyout firms, after a spike in financing costs during the last

two years made financing leveraged buyouts more expensive and

big deals hard to clinch.

The private equity industry is sitting on roughly $4

trillion of capital that is yet to be deployed and dealmakers

anticipate a surge in buyout volumes next year.

"What we saw happening in the second part of the year is the

return of private equity transactions. The third quarter had the

highest volume of PE-backed transactions since the second

quarter of 2022," said Katz.

Global M&A volumes stood at $3.2 trillion during the first

11 months of 2024, up from $2.76 trillion during the same period

last year, according to data provider Dealogic.

Dealmaking activity in also expected to get a near-term

boost from inbound acquisition interest from foreign buyers for

high-growth U.S. companies.

"The inbound interest, the logic for it, the strategic

interest of it, is a much bigger tailwind than the use of CFIUS

against certain countries. As an overall deal matter, I don't

see (the CFIUS issue) as something that's going to slow down the

desire of capital to come into the US," said Miles.

(Reporting by Anirban Sen and Echo Wang; Writing by David

French;)