2024 Reflections and a Look Ahead to 2025: Examining Trends in M&A, Cross Border Financing, and AI

The mergers and acquisitions (M&A) landscape in 2024 showed signs of recovery following the slump experienced in 2023. Deal volumes increased, but the market remains considerably slower compared to the boom years of 2021 and 2022. Several factors contributed to this mixed performance, including ongoing geopolitical uncertainties, high interest rates, and inflation. However, industry professionals remain cautiously optimistic.

M&A Rebound and Future Trends

Eric Chow, partner in the Transactions Practice with Foley & Lardner, noted that despite the slow recovery, the current market environment has favorable elements. “In 2024, we saw a rebound in terms of deal volume compared to 2023, although the market is still considerably slower than in 2021 and 2022. This is probably attributable to global geopolitics, higher interest rates, and inflation, among other factors,” Chow stated. However, he emphasized the growing role of artificial intelligence (AI) and digitization as key drivers for deals, forecasting continued upward momentum in the sector. “With the recent interest rate cut and increased certainty on geopolitics that the upcoming election will bring, we are optimistic that the M&A market will continue to trend upward in the near term,” Chow added.

Venture Financing Trends in Latin America

In line with global trends, 2024 also showed a slowdown in venture financing activity for Latin American (LATAM) companies. Venture capitalists exercised caution when deploying capital into the region, reflecting the broader investor sentiment worldwide. Despite this, growth and late-stage funding rounds still took place, especially in sectors like fintech, which remains at the forefront of LATAM’s economic evolution.

Andre Thiollier, a partner with Foley & Lardner who focuses on the LATAM market, discussed the region’s venture capital outlook. “In 2024, we saw a slowdown in venture financing involving LATAM companies as the region followed the world trend of declining deal volume and capital deployment. Investors remained diligent about allocating resources to this market. However, important growth and late-stage rounds took place,” he explained.

Thiollier highlighted that fintech continues to lead investment activity in LATAM due to its potential to address issues like the large unbanked population and regulatory support from local governments. “Fintechs were at the tip of the spear, given the solutions they provided that outpaced traditional financial institutions. For 2025, the expectation is that the correction in high valuations from 2020 and 2021 should start fading, and we should see more deals in the pipeline,” he predicted. He added that LATAM tends to follow U.S. market trends with a lag of three to six months, which could mean that 2025 will see a gradual rebound in venture funding.

AI’s Impact on Venture Capital: The Coming Golden Age?

2024 witnessed continued significant investment into AI companies, with massive nine-figure funding rounds going to firms that sometimes had little more than an innovative concept and a prominent name attached to them. While this wave of funding has focused mostly on research and development, the test for these companies will come in 2025 when the sustainability of their business models is more closely scrutinized.

Lyman Thai, a partner with Foley & Lardner who focuses on AI startups and venture capital investment, offered his insights into the industry’s future. “In 2024, we saw AI companies continue to receive massive nine-figure funding rounds, sometimes with little more than a prominent name and an idea. Most of the funds will go quickly to R&D and compute, but revenues will be nowhere near what is needed to sustain these companies in the long term,” Thai observed.

Looking ahead, Thai predicts a rationalization in the AI space by mid-2025. “There will be less venture capital and limited partner enthusiasm to continue funding large-scale experiments, and by mid-2025, we will see winners and losers emerge from the first wave of super-financed AI companies. From there, I expect the start of an AI golden age, as novel applications take shape, developed by the alumni of the first wave,” he concluded.

Conclusion

As 2024 comes to an end, global business remains in flux, shaped by geopolitical uncertainty, inflation, interest rates, and technological change. The M&A market shows signs of recovery, AI still dominates investment trends, and Latin America is looking for future growth in venture financing, especially in fintech. Chow, Thiollier, and Thai see 2025 as a year of potential growth with AI innovation leading the way.

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