Investors should prepare themselves for a strong return to deal activity in 2025. As of Q3 2024, green shoots had already begun to appear, and the US Federal Reserve’s 50 bps rate cut is expected to unleash more activity. However, with increased activity comes increased risk, and investors will do well to review several areas to make sure an appropriate risk management focus is still in place:
2022’s spike in inflation in Q1, the ensuing sharp rise in interest rates, and significant equity-market correction cast a shadow over equity valuations and lured investors to consider resurgent fixed-income instruments. As a result, many private markets investors and corporate buyers – the drivers of global M&A – have spent the past two years sitting on the sidelines instead of transacting.