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Following a period of challenging macroeconomic conditions in recent years with elevated inflation and interest rates, the environment started to ease during 2024. Central banks, including the Federal Reserve, European Central Bank and Bank of England, initiated their rate-cutting cycles as inflation moved closer to target, with a knock-on positive impact on investor sentiment and markets. Market sentiment saw a further boost late in the year following the outcome of the US election in November. Market participants initially anticipated a so-called “Trump bounce” due to the Trump administration’s stated pro-business policies (tax cuts and deregulation efforts). The Trump administration has followed through on its tariffs and several other policies, which supports an expectation of continued geopolitical uncertainty and potential inflationary pressures. The medium-term impact on market sentiment and deal activity remains to be seen.
Notwithstanding geopolitical uncertainty and broader market sentiment, we believe that the broader appetite for financial services transactions remains strong. Transactions will continue to be influenced by the benefits of scale as a way to preserve and increase competitive positioning and the synergies they can create. We also recognize four additional themes that we see driving deal activity across the financial services industry to help companies achieve their strategic goals.
