In a recent roundtable hosted by Utah Business‡, I had the opportunity to sit down with fellow finance and business leaders to talk about what’s happening in the merger and acquisition (M&A) market and where things are headed in 2025—not just in Utah, but nationally.
Interest rates and the broader economic environment dominated the discussion, and one big question kept coming up: Will M&A activity continue, even with this higher-for-longer interest rate climate?
My answer? Absolutely.
Just like the consumer market, the M&A market can be sensitive to the interest rate environment, although it’s not as interconnected. When rates are higher, companies considering a merger or acquisition must get more creative to find success and make their dollars go further. But in my view, that doesn’t mean we see a slowdown; it just requires innovation, collaboration and smart structuring. A sound acquisition will usually be less sensitive to interest rates and more tied to solid economic fundamentals. It’s these strong fundamentals that UMB stand by in all economic environments, which is why UMB has seen steady growth in M&A deal flow in Utah.
Companies finding recent success in this area have joined with excellent capital providers across both private equity and strategics. The key is connecting with those who truly understand how a bank fits into the capital stack as lenders and not using debt to solve for areas where equity should be considered. There has been some recent posturing among banks’ balance sheets, and that trickles down to their lending appetite. The best banks are those that don’t change their posture when it’s convenient based on issues in the banking world. Conversely, it’s critical that banks work with the best equity providers, those that want to finish the race with a platform company regardless of current events or short-term economics in a deal. You can tell if your bank is well-experienced in M&A by asking them a few questions, such as requesting references similar to your company or seeing how they performed through other economic downturns.
This is further supported by M&A Worldwide, which shares that the U.S. middle market saw a 20% year-over-year increase in deal announcements in Q4 2024‡, a trend expected to continue in 2025. When it comes to the current M&A market, UMB has experienced it firsthand, as we recently completed our own acquisition‡, the biggest bank deal to date in 2025—and the largest in our company’s history.
Our operating companies that haven’t done a transaction in 2024 are looking to do so by exploring the right opportunities. At the end of the day, a great platform will always be great regardless of what interest rates do, and smart relationships can open doors you might not have otherwise considered.
If you are a business owner exploring M&A, we can help you navigate the tailwinds for a secure landing. Visit UMB.com to learn more.
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