Ethan Klingsberg is a Partner at Freshfields US LLP. This post is based on his Freshfields memorandum.
1. No private equity M&A boom in 2025, but….
Thousands of private equity portfolio companies are past their “sell by” dates and private capital institutions have trillions of dollars in dry powder to finance everything from senior debt to equity for purchases of these companies by M&A buyers. This seems like a perfect formula for an M&A explosion, right?
Jonathan Berk is The A.P. Giannini Professor of Finance at Stanford Graduate School of Business, and Jules H. van Binsbergen is the Nippon Life Professor on Finance at The Wharton School of the University of Pennsylvania. This post is based on their recent article forthcoming in the Journal of Financial Economics.
If a socially conscious investor wants to have real impact on the way a company operates, what is the best way to achieve it? Given the increased interest in this question by policymakers, institutional investors, and retail investors alike, evaluating what is likely to work, and under what circumstances, deserves careful theoretical and empirical research. In our paper The Impact of Impact Investing which is forthcoming in the Journal of Financial Economics, we provide theoretical and empirical evidence that one often-advertised way of socially responsible investing is unlikely to materially change the way companies operate: divestment in secondary markets. Direct investments in primary markets, and increasing voting rights (engagement) by buying (rather than selling) stocks in secondary markets, both deserve careful attention.
Harris Fischman, John Carlin, and Jeannie Rhee are Partners at Paul, Weiss, Rifkind, Wharton & Garrison LLP. This post is based on a Paul, Weiss memorandum by Mr. Fischman, Mr. Carlin, Ms. Rhee, Lorin Reisner, Matt Kaminer, and Hunter Kolon.
During Chair Gary Gensler’s last fiscal year heading the Securities and Exchange Commission, the total number of enforcement actions dropped, but financial remedies hit a record high. In this Year in Review, we highlight important takeaways for business leaders and in-house counsel from the Enforcement Division’s activities in 2024, and look ahead to the SEC’s priorities in 2025 under a second Trump administration.
Beth Sasfai is a Partner, Michael Mencher is a Special Counsel, and Jack Eastwood is an Associate at Cooley LLP. This post is based on their Cooley memorandum.
2024 was an active year for environmental, social and governance (ESG) regulations, voluntary reporting standards, and stakeholder policies. While the incoming Trump administration is expected to halt federal sustainability reporting regulations for the next four years, 2024 saw several significant state and international regulatory developments that will impact US and other companies in 2025. In addition to numerous significant pending regulations, 2025 will see many companies busily preparing for initial disclosures under existing regulations, such as the California climate statutes and the European Union’s Corporate Sustainability Reporting Directive (CSRD).
This client alert provides an overview of the current state of key climate and sustainability regulations, as well as significant stakeholder developments as of the end of 2024. It also highlights critical areas of focus for the year ahead.
Scott Levi, Maia Gez, and Michelle Rutta are Partners at White & Case LLP. This post is based on a White & Case memorandum by Mr. Levi, Ms. Gez, Ms. Rutta, Danielle Herrick, Melinda Anderson, and Tami Stark.
White & Case’s Public Company Advisory Group has conducted a survey of publicly filed insider trading policies to assess emerging trends with respect to key insider trading policy terms. Starting with Form 10-K/20-F annual reports for June 30 fiscal year end companies, new SEC rules [1] (under Item 408 of Regulation S-K) now require companies to disclose whether they have adopted an insider trading policy, and, if so, to file such policy as Exhibit 19 to their Form 10-K [2] or Exhibit 11 to their Form 20-F. Companies with calendar year-end fiscal years will be required to meet these new insider trading policy requirements in their upcoming annual reports filed in early 2025. [3]
Andrew J. Nussbaum, Steven A. Cohen, and Igor Kirman are Partners at Wachtell, Lipton, Rosen & Katz. This post is based on a Wachtell Lipton memorandum by Mr. Nussbaum, Mr. Cohen, Mr. Kirman, Karessa L. Cain, Mark F. Veblen, and Victor Goldfeld.
After a two-year decline in private equity activity, 2024 witnessed a rebound in both private equity acquisitions and exits, though volumes were still well below pandemic-era levels. Total announced global private equity deal volume increased 22%, from $1.3 trillion in 2023 to $1.7 trillion in 2024. Many of the headwinds that private equity M&A faced over the prior two years—including elevated interest rates and tumultuous financial markets—abated or stabilized. At the same time, several years of stalled exits have led to record long investment holding periods, with sponsors having an average holding period of five years in 2023-2024, compared to 4.2 years in 2021-2022. Robust fundraising has also left sponsor dry powder levels near 2023’s historical peak.
We expect that the combination of record-high amounts of deployable capital, sponsors seeking liquidity events, and improving market conditions will cause private equity dealmaking to increase in 2025. Sponsors seem increasingly willing to transact at current market valuations, and the robust credit and equity capital markets should facilitate activity.
This roundup contains a collection of the posts published on the Forum during the week of January 17-23, 2025
Matteo Tonello is Head of Benchmarking and Analytics at The Conference Board, Inc. This post is based on a Conference Board memorandum by Mr. Tonello, Dana Peterson, Jeanne Shu, and Chuck Mitchell.
Adair Morse is the William A. and Betty H. Hasler Chair in New Enterprise Development and Professor of Finance at the Haas School of Business, and Parinitha Sastry is an Assistant Professor of Finance at Columbia Business School. This post is based on their recent paper.
In recent years, the banking sector has witnessed a significant shift, with banks representing 41% of global banking assets voluntarily committing to aligning their portfolios with a decarbonizing, net zero economy. Even banks without net zero commitments are pursuing investments in low emissions transitions. This trend raises important questions about the economics behind these commitments and their implications for the banking industry and capital allocation in the real economy.
