Editor’s Note: Today, we’re thrilled to share insights from Shah Gilani, the Chief Investment Strategist at Manward Press. Shah brings a wealth of experience as a former hedge fund manager and a respected market analyst, making him one of The Oxford Club’s premier Pillar One Advisors.
For more wisdom from Shah and his team, you might want to check out their e-letter, Total Wealth.
– James Ogletree, Managing Editor
Buckle up, folks—2025 is shaping up to be a monumental year for dealmaking!
We’re talking about mergers, acquisitions, spinoffs, leveraged buyouts, IPOs, and private equity portfolio companies going public. All of these are set to thrive in 2025, especially if Donald Trump remains in office.
The movers and shakers of Wall Street are eager to dive into these juicy opportunities. The potential for profit is massive… if you know where to focus your attention.
So, what’s fueling this prospective boom in business?
Easing Regulations: The Trump administration’s pro-business stance is poised to make waves by rolling back many antitrust regulations introduced during the Biden era. These regulations had previously delayed high-profile mergers within industries such as tech, healthcare, and energy. With the red tape diminishing, companies previously hesitant to engage in big deals may now be scrambling to negotiate.
Declining Interest Rates: After holding rates high throughout 2024 to curb inflation, the Federal Reserve’s pressure to relax rates will likely become unavoidable. This drop in rates means cheaper financing, which is the lifeblood of substantial mergers and acquisitions.
Rise of Private Credit: While traditional banks have tightened their lending standards in recent years, private credit funds—supported by giants like Apollo, Blackstone, and KKR—are stepping up significantly. Boasting trillions in available capital, these funds are prepared to finance buyouts, leveraged acquisitions, and strategic mergers with minimal regulatory constraints.
Traditional Banks Joining In: While private credit is making headlines, banking powerhouses like JPMorgan, Goldman Sachs, and Morgan Stanley are not sitting on the sidelines. They’re increasingly involved in underwriting deals and collaborating with private lenders, creating a formidable M&A financing network unlike anything we’ve seen before.
So, what does this convergence of factors mean?
As regulatory barriers come down, expect big tech companies to be on a buying spree to enhance their AI and semiconductor prowess. Keep an eye on Microsoft and Google as they likely eye up-and-coming AI startups and data analytics firms. Meanwhile, chipmakers such as Nvidia and AMD might target suppliers to bolster their supply chains.
Additionally, Taiwan Semiconductor and Broadcom have shown interest in acquiring parts of Intel.
And that’s just scratching the surface.
Major pharmaceutical companies like Pfizer and Merck are setting their sights on promising gene therapy and oncology startups as well as private equity holdings.
In the energy sector, expect giants like ExxonMobil and Chevron to snap up smaller producers, taking advantage of deregulation and Trump’s pro-drilling policies.
Industrial conglomerates will likely shed non-core assets while investing more in areas of growth like automation and aerospace.
Also, many multi-faceted corporations will seize the opportunity to spin off parts of their operations to unlock hidden value, streamline operations, and hone in on their core competencies.
Here are some key moves to keep an eye on:
DuPont’s Electronics Spinoff: Set to be completed by November 1, this move will establish a standalone electronics entity specializing in manufacturing materials for technology in high demand, like semiconductor chips and AI computing.
Johnson & Johnson’s Consumer Health Unit: Since splitting into two companies, further restructuring could be on the table, potentially leading to exciting M&A developments.
GE’s Final Breakup: With GE having divided into independent aviation, healthcare, and energy entities, there could be additional divestitures as each sector charts its own course.
This wave of dealmaking represents a lucrative opportunity.
Investing in companies before they become acquisition targets could yield substantial gains. Stocks of potential targets usually soar once deal announcements are made.
Keep an eye on undervalued businesses within sectors ripe for consolidation, such as biotech, AI, and energy.
Another option is to explore ETFs and mutual funds.
The Invesco Dynamic M&A ETF (MNA), for example, follows merger arbitrage strategies, offering the potential to capitalize on announced deals with limited downside risk.
But remember, not every merger succeeds.
If an acquiring firm overpays or encounters unexpected regulatory hurdles, its stock could plummet. Savvy traders might benefit from shorting weaker players in the dealmaking arena.
Since private credit is driving much of this activity, investing in firms like Apollo, Blackstone, and KKR could prove to be a lucrative strategy.
Prepare to Seize Opportunities
The 2025 M&A wave is poised to make history.
With a market-friendly administration, easing interest rates, and a surge of private credit, the environment is primed for unprecedented deal activity.
Position yourself strategically, keep an eye out for promising developments, and get ready to capitalize on what could be the most significant dealmaking spree of the decade.
