LA Dealmakers Remain Bullish on ’25 Despite a Seesaw of Uncertainty
Panelists at ACG Los Angeles’ recent State of Investment Banking event say buyers and sellers are finally accepting the ‘new normal’ of M&A
Just weeks after the devastating Palisades and Eaton fires ravaged parts of Los Angeles, dealmakers from the region gathered in Santa Monica for the ACG Los Angeles State of Investment Banking panel to discuss what’s ahead for the market—with a portion of the night’s proceeds going to the Los Angeles Fire Department Foundation and the American Red Cross in support of fire relief efforts.
With an introduction from ACG Los Angeles’ new President Cornelia Cheng, the panel, moderated by Snell & Wilmer Partner Rose Sorensen, included J.P. Morgan Managing Director, Investment Banking Bob Berkus; Cascadia Vice Chairman, Market Development Christian Schiller; and Bank of America Merrill Lynch Managing Director, Investment Banking Maz Yafeh.
Panelists seemed in agreement that once the uncertainty surrounding the presidential election had been resolved, buyers and sellers faced a fresh wave of uncertainty around economic policy. That has dampened the outlook for what Berkus described as the “fourth year of optimism” as dealmakers continue to anticipate an M&A boom only to end the year with more of a whimper than a roar.
Event Recap
WHAT: ACG Los Angeles State of Investment Banking Panel
WHEN: Jan. 30, 2025
WHERE: Shutters on the Beach, Santa Monica
THE TAKEAWAY: In M&A, there are “Michael Jordan” years, and there are “Dennis Rodman.” Panelists say 2025 is more likely to be a “Scotty Pippen” year as buyers and sellers get used to a new normal of dealmaking.
Even so, panelists said there is plenty to be bullish about. Read some of the evening’s highlights below.
Michael Jordan vs. Dennis Rodman vs. Scottie Pippen
In his more than 30 years of experience, Schiller—who acknowledged his love of sports analogies—said he has seen a spectrum of M&A markets, including “Michael Jordan” years and “Dennis Rodman” years.
Jordan years are the ones full of fast-paced dealmaking around high-quality assets; Rodman years, on the other hand, are those in which investors “wait around the hoop for the rebound,” looking to pick up deals that are low-hanging fruit, or perhaps didn’t make it past the finish line the first time around.
So, which year is 2025 likely to be? Neither. Instead, said Schiller, it’s more likely to be a Scottie Pippen environment. “He’s a balanced player, he plays pretty good defense and offense,” he said. “Most markets are a Scottie market. In 2025, the winds aren’t going to blow all one way or the other. It’s a very discerning market.”
Most markets are a Scottie (Pippen) market. In 2025, the winds aren’t going to blow all one way or the other. It’s a very discerning market.
Christian Schiller
Cascadia
Investment bankers in this kind of climate, he added, should be looking to “get rid of all the ‘lookers’ and the ‘Rodmans,’ and move to the Jordan buyers so we can jam it home.”
The Seesaw of Political Uncertainty
2024 came to a close with many middle-market dealmakers waiting for clarity on the outcome of the presidential election. With that question answered, dealmakers are once again faced with uncertainty thanks to a slew of sudden, rapidly-evolving executive orders from the Oval Office.
Foreign tariffs are particularly concerning for businesses with global supply chains, while question marks around inflation and interest rates are also hovering over the M&A community. Panelists repeatedly pointed to unknowns around how the Hart-Scott-Rodino Act could impact mergers and acquisitions in the middle market, too.
“Nobody’s proactively making significant changes to their supply chain, because there is so much uncertainty and volatility,” said Berkus. “Everybody wants to be prepared and ready, but continues to actively monitor the situation. The M&A markets don’t like uncertainty…so as of right now, it’s business as usual, but be prepared that things could change quickly.”
The Fourth Year of Optimism
Despite these headwinds, the panelists were in consensus that dealmakers are bullish in 2025.
Even so, they acknowledged that dealmakers have been optimistic in years past—notably, in 2023 and 2024—anticipating a dealmaking bounceback that never fully materialized.
When it comes to exits, panelists agreed that IPOs—once a hot exit strategy—are likely going to be reserved for the larger market, pushing leveraged buyouts into the midmarket sphere. With LPs getting impatient for returns on their investment, some panelists predicted that 2025 will be a year of dealmaking creativity, where minority investments and private capital enter the mix to unlock liquidity in scenarios where portfolio companies aren’t ready for a full exit and don’t have a path to go public.
With both buyers and sellers seeming to finally accept that valuations and the pace of dealmaking aren’t going to look like they did back in 2021, it appears both sides of the dealmaking table will be willing to accept the new normal to push deals across the finish line this year.
“You’re probably going to open the aperture a bit,” said Schiller. “Instead of just the A+ asset, maybe now you’re going to get A-, B+ deals hitting the market. Those will also not have as much structure, and private equity is going to play pretty aggressively on a wider lens.” For the seller, he continued, understanding where the business fits within that scope will be key. “It’s really about knowing what you are in that sphere and being honest with yourself, and basically level-setting your expectations to this market—not to ’21.”
Carolyn Vallejo is ACG’s Digital Editor.
Middle Market Growth is produced by the Association for Corporate Growth. To learn more about the organization and how to become a member, visit www.acg.org.
