Wall Street is cheering a potential revival of mergers and acquisitions when the new Trump administration takes office, and bankers and investors alike are already trying to find out what deals could be coming first. The combination of rate hikes from the Federal Reserve and an aggressive antitrust approach, embodied by Federal Trade Commission Chair Lina Khan, has made the past few years pretty slow for deal-making. Now that the election is over, and a change at the FTC seems highly likely, Wall Street is getting ready for a new era. “Being past the election has removed market uncertainty, first and foremost. Markets like certainty and you’re seeing that broadly across capital markets. … Over the medium to long term, there should be a further catalyst for IPOs, M & A and key sectors we invest in,” said Carlyle CEO Harvey Schwartz on a Nov. 7 earnings call . In the pipeline Trump’s win comes as the mergers business was already showing some signs of waking up. Deal announcements are up 25% year over year in 2024, according to Morgan Stanley, after a historically quiet 2023. The recent rate cuts by the Federal Reserve may be helping grease the wheels of the deal market, especially for transactions that involve debt. “As the interest rates decrease, we obviously see more of an alignment and less of a valuation gap between the sellers and the buyers, and the cost of capital is coming down as leverage continues to increase,” Stephanie McCann, a partner at law firm McDermott Will & Emery who works on private equity and smaller public deals, told CNBC. With the Fed having cut rates again in November and an expected switch to a more business-friendly regulatory environment in January, the size and scope of deals could start to expand in the coming months. Potential candidates One common motivation for a company to buy another is growth. A larger, more established company wants to show its investors that it is not out of ideas, and it may look to absorb a smaller, fast-growing company to do so. In that vein, Wolfe Research identified small and midcap companies with high projected growth rates. One of these, e.l.f. Beauty , recently made a big purchase of its own with a $355 million deal to acquire Naturium last year. Another name on the list might be more likely to seek a sale after some news this week. Hims & Hers fell more than 24% on Thursday after Amazon announced it would start offering similar health products to Prime members. A Goldman list of…
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