Denton’s Michael Snook: “Dry powder” ready to ignite in 2025

In a tricky transaction environment, vendors are using different techniques to create tension in the sale process. Meanwhile, more activity is expected in the UK&I M&A market as we head into 2025 and the environment becomes more benign. 

Dentons’ Partner Michael Snook says in 2024, the transaction market hasn’t been as buoyant as expected: “So, I hope in terms of the outlook, that means we can be positive. There have been several years of pent-up demand, so hopefully 2025 will be a positive year. But there are plenty of headwinds that could knock us off track.”

This excerpt from our 2025 UK&I M&A Outlook Report, which features insights from 8 top UK&I dealmakers, explores Michael Snook's perspective on the factors shaping M&A activity in the UK&I market. Michael discusses the anticipated rise in deal activity driven by improving economic conditions and a need for companies to bolster their supply chains. He also highlights the increasing influence of geopolitical uncertainty, regulatory scrutiny, and the evolving role of AI in the dealmaking process.

Drivers of M&A activity

Michael says companies seeking to secure their supply chain is a theme that will drive transactions next year. “We’ll see more regionalisation as people realise it’s potentially a more difficult world for global trade.

There is also increasing regulatory, competition and anti-trust scrutiny.” Private equity will be a big story. “There is dry powder, money that needs to be spent; portfolio companies that need to be sold. There will be a real push to start doing deals,” he says.

Navigating geopolitical uncertainty

Michael believes a trend is companies and businesses starting to live with the various geopolitical tensions and hot spots. “There’s always something on the horizon. Over the last four years, we have had a pandemic and various climate and other destabilising events and there is likely to be more of the same. It’s not been a great climate for M&A.

High interest rates and geopolitical events affect businesses and transactions.” This has led to a rise in capital raisings, which he attributes to the economic climate.

“It means people want to firm up their balance sheets, do capital raisings and refinance while they can, either before things might get worse or to put themselves in pole position for improving market conditions. In the PE context, refinancing might be happening because a fund hasn’t been able to sell an asset and you need to refinance while you wait for a better valuation or better circumstances for a sale. It tells us there has been uncertainty generally and people are hopeful of a sunny day around the corner,” says Michael.

Evolving financing landscape

Private capital will continue to take a share of the financing pie. “It’s not just banks providing financing, it’s sovereign wealth funds and family offices and a lot of alternative finance providers. There’s money out there and people want to spend it and use it. That doesn’t mean it’s easy to get deals done, because interest rates are still relatively high, but there are new sources of capital out there willing to finance deals.”

Regulatory scrutiny

Tighter anti-trust regulations are likely to play out in transaction markets in the year ahead. “New rules in the US will mean an increased notification burden. In the UK, we have a more assertive Competition and Markets Authority and the government is consulting on an expansion of the scope of the National Security and Investment Act, notably in relation to semiconductors and critical minerals.

Regulators around the world, including in the UK, are watching deals more closely. We also have a new UK government that may be looking to put its stamp on things,” he says. When it comes to managing, administering and financing deals, Michael says more sophisticated transaction management software is being used to track documents, processes and timetables. “That will only become more prevalent.”

Impact of AI

While AI has yet to impact the dealmaking process in any major way, it will play an increasingly important role in the future. “We want it for due diligence, but the technology isn’t quite where it needs to be in terms of reliability. 

There are governance, data and confidentiality concerns. But the more people use it, the more comfortable they will be. It will become part of deal making. We’re not quite fully there yet, but we’re excited about the untapped potential” he says.

Navigating the deal process

According to Michael, recent deals are taking longer to get done and they are harder to do. That reflects longer, more detailed due diligence. “People are poring over every detail, because it’s an uncertain market. Sellers are limiting the number of questions they are willing to accept. So buyers need to focus on what’s important. Sellers are trying to create tension and momentum with transactions.”

ESG considerations

In Michael’s areas of infrastructure and renewable energy, Environment Social Governance (ESG) will continue to be a focus, albeit with some fatigue setting in. “We may have hit the high watermark with ESG. It’s still a feature of due diligence. But it’s priced in and businesses have been paying real attention to it for over a decade or more now. People understand if you’re going to do deals in certain geographies and sectors, there’s going to be an element of risk.”

Career reflections

He says a career highlight was working on a household name deal. “We acted for Twenty- First Century Fox when they were trying to buy Sky. It had all the twists and turns. I was relatively junior and it was exciting to play a small part in something so public and interesting. 

Moving to Dentons and becoming a partner is a big career highlight as well, as was my recent role advising UK Infrastructure Bank (now the National Wealth Fund) on its investment in Invinity Energy Systems. My focus is infrastructure and renewable energy so it is great to be involved in deals that are advancing the UK’s renewable energy infrastructure and supporting the transition to a low-carbon future.”

Michael’s advice for the ambitious is to develop fortitude to underpin a long, successful career. “Markets go up and down. Take advantage of it when it’s busy, because you learn so much and you get so much experience. When it’s quieter, there’s a time for reflection. Use the time wisely as before you know it, there’ll be another busy period around the corner.”

Looking ahead

Michael Snook’s insights offer valuable perspectives on the M&A landscape in the UK&I. To gain a deeper understanding of the key trends and predictions shaping the market, we encourage you to download the full M&A Outlook report. This comprehensive report features in-depth analysis to equip you with the knowledge you need of the current deal environment in the United Kingdom and Ireland to be able to capitalise on emerging opportunities.