A wave of optimism has swept through Wall Street as corporate leaders and dealmakers anticipate a surge in mergers and acquisitions (M&A) under President-elect Donald Trump. With Republicans claiming a Senate majority, expectations are high for reduced regulations that could unlock pent-up demand for corporate deal-making.
A New Era for Deal-Making
Jeffrey Solomon, president of TD Cowen, expressed confidence in the pro-business environment likely to emerge under Trump. Speaking on CNBC’s *Money Movers*, Solomon said, “I think the regulatory environment will be much more conducive to economic growth. There will be lighter and targeted regulation.” This shift contrasts sharply with the scrutiny seen under the Biden administration, which deterred some deals through strict enforcement by the Department of Justice (DOJ) and Federal Trade Commission (FTC).
Chair Lina Khan defended the Biden administration’s tough stance in September, stating, “When you see greater scrutiny of mergers, you can see greater deterrence of illegal mergers.” However, critics have pointed to this approach as stifling the M&A market.
The outlook is now brighter. A leading dealmaker noted that if corporate tax rates and interest rates drop, the conditions will be ripe for a “really active M&A market.”
Key Sectors Poised for Growth
Certain industries stand to benefit more than others. Pharmaceuticals and financial services are likely to experience a significant uptick in activity. Jared Holz, Mizuho’s health-care equity strategist, explained, “Whether or not Lina Khan is bounced day one is a key consideration, but even if fewer changes at the FTC take place, this administration will be far more amicable when it comes to business combinations.”
Pharmaceutical executives, in particular, hope for relaxed antitrust enforcement, enabling stalled deals to move forward. Meanwhile, in the financial sector, regional banks are expected to consolidate to achieve the scale needed to compete, a trend that may accelerate under a Trump administration.
However, challenges remain for the tech industry. Trump’s critical stance on Big Tech and GOP opposition to the CHIPS Act could complicate deals in the semiconductor space.
Retail and Media Look to Consolidate
The retail sector could see major deals like Kroger’s bid for Albertsons and Tapestry’s acquisition of Capri gain traction. GlobalData managing director Neil Saunders commented, “The hostile approach of the FTC to mergers and acquisitions will almost certainly be reset and replaced with a worldview that is more favorable to corporate deal-making.”
In the media industry, CEOs like Warner Bros. Discovery’s David Zaslav and Sinclair’s Chris Ripley have voiced optimism about the new regulatory landscape. Zaslav highlighted opportunities for consolidation, saying, “It may offer a pace of change and opportunity for consolidation that may be quite different.”
Wall Street’s Positive Momentum
Trump’s election victory already spurred markets, with the Dow Jones Industrial Average soaring 1,500 points to a record high. The combination of anticipated regulatory changes and a Republican-led Senate signals a pro-business climate that Wall Street is eager to embrace.
As GlobalData’s Saunders noted, the new administration might not wave through all big deals, but the atmosphere will undoubtedly become “far warmer” for corporate deal-making. With this momentum, industries are gearing up for what could be a transformative period in M&A activity.
