2025 M&A Special Situations Outlook from FTI Consulting
In 2024, the special situations M&A market in private equity experienced a surge in deal activity, with a modest increase in the latter part of the year. There was an expectation that this heightened activity would result in more distressed M&A opportunities for investors. However, the volume and quality of these opportunities fell short of investor expectations. Many of the distressed opportunities identified were deemed too distressed and lacked viable turnaround strategies to make them suitable for investment.
Various sectors, particularly those vulnerable to discretionary spending, such as automotive, retail, and consumer goods, presented the most distressed M&A opportunities in 2024. Despite the economic and political disruptions, the number of special situations deals was lower than anticipated. Investors observed that these opportunities were often too distressed to warrant consideration for a turnaround transaction.
Looking ahead to 2025, special situations private equity investors maintain a cautious outlook. While there is an anticipation of an increase in distressed M&A opportunities due to prevailing economic and financial conditions, it is likely to be concentrated in specific sectors. Factors like upcoming maturities and limited lender willingness to further support struggling companies will be significant drivers of distressed M&A deal activity.
This report serves as a comprehensive overview of the special situations M&A landscape in the past year, along with insights into economic trends and potential distress areas for 2025. It aims to equip investors with valuable information to navigate challenges, address complex issues, and achieve the best possible outcomes in their investments.
As 2025 unfolds, it will be crucial for investors to stay vigilant and informed about emerging opportunities in the special situations M&A market. By being proactive and strategic in their approach, investors can position themselves to capitalize on the upcoming distressed M&A landscape and achieve successful outcomes in a shifting economic environment.
