A Renewed Trump Presidency and the impact on Mergers & Acquisitions: Part 2 - Industries Affected

Industries Poised for Transformation Under the New Trump Administration

With Donald Trump set to return to the White House, businesses across the U.S. are preparing for a significant shift in mergers and acquisitions (M&A) activity. Trump’s pro-business policies, combined with a likely reduction in regulatory barriers, are expected to foster an environment conducive to deal-making.?Industries ranging from energy to healthcare, financial services to technology, and aerospace are poised to experience significant consolidation as companies adapt to economic and policy changes.

Here’s a detailed look at the industries most likely to be affected by the new administration.

1. Energy Sector: A Push-Pull Between Expansion and Diversification

The energy sector is one of the biggest potential beneficiaries of Trump’s policies, but its path forward will depend on a complex interplay of deregulation and the growing global push toward sustainability. Trump’s administration is expected to prioritize traditional energy sources, including oil and gas, over renewables, which could influence the pace of the industry’s transition to sustainable energy.

Key Drivers:

• Deregulation: Trump’s policies are likely to favor oil and gas producers by rolling back environmental restrictions, lowering operational costs, and reducing the permitting hurdles for drilling and infrastructure projects.
• Rising Oil Prices and Consolidation: High oil prices provide an incentive for larger energy companies to acquire smaller or distressed firms to expand their reserves and production capabilities. Deals like the recent Occidental Petroleum-CrownRock merger are indicative of a trend that could continue.
• Sustainability and Diversification: Under Trump: The transition to renewable energy may face a slowdown as his administration focuses on traditional energy sources. While some companies may still pursue acquisitions in renewables as a hedge against future regulations, the pace of this shift is expected to decelerate. Global Pressure: International market forces, investor demands, and the Inflation Reduction Act’s incentives for renewables may still push energy companies to diversify, even under Trump’s administration. However, these deals are likely to play a secondary role compared to traditional energy M&A.

Outlook:

The energy sector will likely see significant consolidation in oil and gas, driven by deregulation and rising commodity prices. While the renewable energy sector will continue to grow globally, Trump’s policies may deprioritize this transition domestically, leading to fewer major M&A deals in sustainable energy.

2. Technology Sector: Mixed Signals

The technology sector is expected to experience both opportunities and challenges under Trump’s administration. While deregulation and a pro-business agenda could unlock significant M&A activity, Trump’s combative stance toward big tech firms may introduce scrutiny for deals involving the largest players.

Key Drivers:

• Cloud Computing and AI: The cloud computing industry, a vital backbone of the modern economy, is expected to benefit from a more relaxed regulatory environment. Companies like Amazon, Microsoft, and Google may look to expand their capabilities through acquisitions in niche technologies like AI and cybersecurity.
• PropTech on the Periphery: Property technology, or PropTech, continues to evolve as real estate companies embrace technology to optimize property management, leasing, and tenant experiences. While PropTech remains a smaller slice of the M&A pie, Trump's policies favoring real estate and innovation could encourage targeted acquisitions.
• Scrutiny of Big Tech: Large-scale mergers involving tech giants like Meta or Google are likely to face heightened scrutiny. Trump's past administration initiated antitrust actions against several major tech players, signaling that while smaller deals may proceed, megamergers could face political and public resistance.

Outlook:

Expect growth in niche areas like cloud computing and AI, with tech giants focusing on smaller, strategic acquisitions. However, large-scale consolidations in the sector may remain constrained due to regulatory and public concerns over monopolistic power.

3. Healthcare and Pharmaceuticals: Strong Growth Ahead

Healthcare and pharmaceuticals are poised for substantial M&A activity under Trump’s administration. Deregulation, coupled with ongoing cost pressures and the need for innovation, creates a favorable environment for consolidation.

Key Drivers:

• Pharmaceutical Mergers: Drug manufacturers are likely to pursue acquisitions to expand their pipelines and access new technologies, particularly in biopharmaceuticals. High-profile deals, such as Pfizer’s acquisition of Seagen, illustrate the sector's appetite for strategic partnerships.
• Telehealth Expansion: The pandemic accelerated the adoption of telehealth services, and Trump’s administration is expected to support further integration of these technologies. M&A activity in this space is likely to focus on scaling and integrating digital healthcare solutions.
• Carl Icahn’s Influence: Activist investor Carl Icahn has expressed confidence that Trump’s policies will reinvigorate M&A, especially in healthcare. Icahn Enterprises’ healthcare portfolio could be at the forefront of consolidation efforts.

Outlook:

Healthcare M&A will likely center on pharmaceuticals, biotechnology, and digital health solutions. Trump’s administration is expected to ease regulatory barriers, making it easier for companies to pursue innovative partnerships and acquisitions.

4. Financial Services: Big Bank Mergers on the Horizon

Financial services are expected to see a resurgence in M&A activity, particularly among regional and mid-tier banks. Trump’s deregulatory stance, coupled with favorable economic policies, could drive consolidation as banks look to scale operations and improve efficiency.

Key Drivers:

• Rollback of Oversight: Trump’s administration is expected to ease capital requirements and regulatory oversight, making it easier for banks to merge and expand.
• Economic Growth: Anticipated infrastructure investments and a pro-growth agenda could lead to higher demand for corporate lending and financial services, further encouraging mergers.
• Wall Street Optimism: Banking executives have expressed confidence in Trump’s presidency as a catalyst for renewed deal-making, with regional banks emerging as key acquisition targets for larger institutions.

Outlook:

Expect significant M&A activity in the banking sector, particularly among regional and community banks. Larger financial institutions will look to consolidate operations and expand their geographic reach.

5. Aerospace and Defense: High Demand Drives Deals

Aerospace and defense industries are poised for a wave of M&A activity driven by increased defense spending under Trump’s administration. A focus on military modernization and national security will likely create opportunities for consolidation, particularly in advanced technologies.

Key Drivers:

• Increased Defense Budgets: Trump’s administration is expected to prioritize defense spending, with a focus on emerging technologies like drones, space exploration, and cybersecurity.
• Global Geopolitical Tensions: Heightened tensions with China and Russia will drive innovation in defense technologies, creating M&A opportunities in areas such as surveillance, communication, and advanced weaponry.
• European Influence: The global demand for drones and aerospace innovation is already driving consolidation in Europe, and U.S. companies are likely to follow suit to remain competitive.

Outlook:

Expect robust M&A activity in aerospace and defense, with a focus on companies developing next-generation technologies. Cross-border deals may also play a significant role as U.S. firms look to collaborate with international partners.

Conclusion: An M&A Landscape Ready for Change

Under President-elect Donald Trump, industries ranging from energy to healthcare, financial services to defense, are poised for transformative change. Deregulation, economic growth, and sector-specific drivers will foster an environment ripe for strategic acquisitions and partnerships. While energy may focus on traditional resources, other sectors like technology and healthcare will see growth in innovative areas like cloud computing and biotechnology.

Future articles will delve deeper into international cross-border M&A dynamics and provide a detailed sectoral analysis for technology, healthcare, and defense, exploring how Trump’s presidency will influence the global business landscape.