A&O Shearman Analyzes Lateral Thinking in M&A for 2025 Insights

A&O Shearman, a prominent global law firm formed from the merger of Allen & Overy and Shearman & Sterling in 2024, has released its latest edition of M&A Insights, focusing on the first half of 2025. This authoritative report delves into critical topics, trends, and opportunities within the realm of global dealmaking, particularly in the context of fast-moving markets. The report highlights how macroeconomic, regulatory, and political factors are shaping M&A activities across various jurisdictions.

The insights provided by A&O Shearman are particularly significant as they address the evolving landscape of mergers and acquisitions (M&A) amidst rising complexities in global trade policies. David Broadley, Partner at A&O Shearman in London, notes, “The shifting trade policies are complicating deal execution, especially for larger transactions, which necessitates strategic navigation by buyers and sellers.” This sentiment is echoed by Dirk Meeus, Partner in Brussels, who emphasizes the need for innovative deal structures in response to the changing economic environment.

According to the firm's analysis, preferred equity instruments are gaining traction as investors seek novel ways to deploy capital effectively. The report identifies that private equity remains particularly active in mid-market take-privates and distressed acquisitions, with private credit increasingly stepping in to facilitate deal financing. Scott Petepiece, a Partner in New York, states, “The life sciences sector exemplifies how companies are pursuing innovative deal structures to address the escalating costs and complexities surrounding drug development.”

Additionally, the report investigates how industrial companies are adapting to challenges posed by high energy costs, tariffs, and stringent antitrust regulations. The examination of the U.S. Outbound Investment Security Program, initiated towards the end of the Biden administration, highlights its impact on transactions involving counterparties from countries deemed as concerns, specifically China, Hong Kong, and Macau.

In Europe, the report notes a rise in defense-related M&A activity, driven by increased military investment and efforts to streamline regulatory frameworks. The analysis articulates distinct investor strategies tailored to meet the demands of this sector, which is particularly relevant given the current geopolitical climate.

The document also sheds light on the acceleration of take-private activities in Southeast Asia, where de-listings in Singapore and Hong Kong, fueled by low liquidity and regulatory challenges, are prompting dealmakers to reassess ownership thresholds and governance rights. Furthermore, the report addresses European merger enforcement challenges faced by industries such as chemicals and steel, where high energy costs and renewed tariff barriers are creating obstacles to consolidation efforts.

A&O Shearman’s M&A Insights serves as a vital resource for stakeholders in the global business arena, providing concise, attorney-driven analyses that elucidate the intricacies of dealmaking across diverse markets and sectors. As companies and investors navigate this complex landscape, understanding these trends and adapting to them will be crucial for achieving successful outcomes in M&A transactions.

This comprehensive examination of M&A activities reflects a broader context of economic uncertainty, regulatory changes, and evolving market dynamics that will continue to influence the future of corporate mergers and acquisitions.