Many dealmakers in Indiana and across the nation expect a robust 2025

After higher interest rates and a sometimes shaky financial market put a damper on mergers and acquisitions in 2023, Indiana law firms that help facilitate deals were hopeful for an M&A bounce back this year.

For some M&A attorneys, it happened, even if the activity wasn’t on par with years like post-COVID 2021.

With the elections over and interest rates coming down, most attorneys expect a robust market in 2025.

Ralph Caruso, a Taft Stettinius & Hollister partner and chair of the firm’s business group, said he considered 2024 a busy year with a different mix of transactions.

“We’re seeing these smaller deals in the market,” Caruso said.

He said the Midwest has a strong, robust pipeline for deals in the coming year. Caruso expects a lot of platform company acquisitions in the first quarter of 2025.

National law firm Dykema released its 20th Annual M&A Outlook Survey in October, surveying more than 200 senior executives and dealmaking advisors about the 2025 market.

According to the firm, 70% of respondents expect a stronger U.S. merger and acquisition landscape in the next 12 months, driven by improved financial markets, the availability of capital and a stabilizing economy.

Nearly seven in 10 dealmakers also believe private equity investors will drive M&A growth in 2025, as firms look to deploy $2.5 trillion in available capital, despite recent challenges such as lower valuations and reduced deal activity.

“Economic volatility, limited exit opportunities, and misaligned valuations remain the biggest hurdles, but dealmakers are turning to creative strategies like dividend recaps and alternative funding arrangements to overcome these obstacles,” said Frank Ballantine, Dykema M&A Survey Leader, in a news release. “With long hold periods dampening returns, PE firms are finding new ways to put capital to work and generate value.”

Josh Hollingsworth, a partner in Barnes & Thornburg’s Indianapolis office, said 2024 M&A activity fell quite a bit below what he had anticipated heading into the year, something driven by a high interest rate environment.

He expects 2025 to be different.

“I think going into 2025, we’re predicting it to be a robust M&A environment with increased activity,” Hollingsworth said, adding that there is a pent-up demand for companies to go to market.

In addition to lower interest rates, the election could also drive some activity, Hollingsworth said, with a lot of businesses tending historically to wait until elections are decided before making decisions on M&A deals.

Which industries could see more deals in 2025?

Hollingsworth said 2024 M&A activity, in terms of specific industries, spanned across the board.

The Barnes & Thornburg attorney said, next year, there could be industries that see more movement than others and be more impacted by President-elect Donald Trump’s policies.

As an example, Hollingsworth mentioned Trump’s proposed tariffs on Chinese and Mexican imports, which would benefit U.S.-based manufacturers.

“You would expect this to be a hot area going forward,” Hollingsworth said.

But Trump’s policies may not be as beneficial for domestic companies that rely on imported goods, Hollingsworth said.

Caruso said consumer products and health care—especially assisted care facilities and home health care companies—are two industries that could see a lot of M&A activity next year.

“Anything that has a health care component to it seems to be pretty active,” Caruso said.

Larry Tomlin, a partner at Amundsen Davis, has practiced law for 25 years. He described 2024 as not the greatest year in terms of M&A activity, but not bad.

The Fed raising interest rates in 2023 resulted in a skyrocketing cost of capital and impacted the M&A market, Tomlin said.

Nevertheless, Tomlin said, 2024 was a busy year for technology deals.

He said he represents a couple of artificial intelligence companies and has seen a consistent demand for mergers and acquisitions in that sector.

Also, demand never goes away, Tomlin noted, and he’s optimistic about 2025.

In 2025, Tomlin said there may be an uptick in M&A activity for the financial services, automotive and energy industries.

Green energy may be a particularly busy industry for deals, Tomlin added.

He also expects the size of deals to be bigger next year, due to an increased access to capital.

“As access to capital increases, people are willing to spend more to achieve these acquisitions,” Tomlin said.

Jason Lueking, an attorney in Stoll Keenon Ogden’s Indianapolis office, said his firm represents clients with auto dealerships in Indiana and the Midwest.

Lueking said 2024 was a steady year, as far as M&A activity in that niche auto sector, and he expects that to continue next year.

The activity, though, is about half of what it was coming out of COVID. “2020, 2021 were really heavy years for us,” Lueking said.

Some factors that might influence 2025 auto dealership mergers and acquisitions could include whether there are capital gains tax cuts and if certain provisions of the 2017 Tax Cuts and Jobs Act are renewed next year, Lueking said.

M&A trends in election years

Election years create some uncertainty in the M&A market, but many dealmakers agree that the period after a presidential election tends to be more active for buyers and sellers.

John Millspaugh, chair of Bose McKinney & Evans’ business services group, said 2024’s third and partially completed fourth quarters have been quite busy so far.

In Central Indiana, the fourth quarter is usually a busy time for M&A transactions, Millspaugh said, with companies sometimes wanting to complete deals before the end of the year.

Millspaugh called the COVID recovery complete for most industries, with supply chains solidified.

“I think it’s business as usual for most folks. And that’s good for M&A,” Millspaugh said.•