The M&A Drought: Why EFG’s CEO Warns of Limited Acquisition Opportunities in 2025

The global M&A landscape in 2025 is undergoing a seismic shift, with Swiss private bank EFG International’s CEO Giorgio Pradelli sounding a stark warning: “There are not many acquisition targets available at present.” This sentiment reflects a broader market reality shaped by geopolitical tensions, macroeconomic uncertainty, and a scarcity of high-quality assets. For investors and strategists, the question is clear: How will institutions like EFG navigate this environment, and what opportunities remain?

A Slump in Dealmaking

The first quarter of 2025 has seen global M&A activity decline by 10% year-over-year, despite a 9% rise in deal values, driven by large transactions in sectors insulated from trade wars (e.g., technology and healthcare). The primary culprit? U.S. tariff policies, which have created a “policy uncertainty index” averaging its second-highest level in 40 years.

Pradelli’s comments underscore the challenges: “The broader M&A market is more fluid, but targets are scarce.” EFG, despite its robust financial position—CET1 capital ratio of 17.7% and record 2024 net profit of CHF 321.6 million—is proceeding cautiously.

EFG’s Playbook: Prudent Growth Amid Scarcity

While EFG remains “very active” in seeking acquisitions, its strategy is laser-focused on strategic fit and cultural alignment. The recent acquisition of Swiss private bank Cité Gestion (CHF 7.5 billion in AuM) exemplifies this approach. The deal, pending regulatory approval, is expected to boost EFG’s Swiss market dominance while being EPS accretive by 2026. However, it will temporarily reduce its CET1 ratio by ~100 basis points, a trade-off EFG deems acceptable.

Key data points: EFG’s stock has risen 12% since 2023, while Swiss M&A deal counts fell 8% in 2024 amid rising geopolitical risks.

The Bifurcated Market: Winners and Losers

The M&A drought is not uniform. Sectors exposed to tariffs—such as industrials—have seen deal flow drop by over 30%, while tech and healthcare firms continue to attract buyers. For example, financial sponsors accounted for four of five U.S. deals exceeding $1 billion in March 2025, prioritizing “best-in-class” assets with secular growth.

Strategic buyers like EFG are leveraging operational efficiency and digitalization to fill gaps. EFG’s 2025 targets include:
- Cost savings: Aiming for CHF 60 million in annual savings via automation.
- Mandate penetration: Targeting 65–70% by 2025, up from 62% in 2024.
- Geographic focus: Prioritizing Switzerland, Asia Pacific, and Latin America, where NNA grew 7.1% in 2024.

Navigating the Uncertainty

The path forward hinges on policy clarity and macro stability. A 90-day tariff “pause” in April 2025 provided temporary relief, but lingering risks persist. EFG’s strong capital base—Liquidity Coverage Ratio of 242%—positions it to act selectively. Meanwhile, private equity firms with $2.5 trillion in dry powder are pressuring for exits, creating opportunities for strategic buyers.

Conclusion: Scarcity Fuels Strategy, Not Panic

EFG’s caution reflects a market reality: quality targets are rare, but disciplined players can thrive. With its Swiss-centric strategy, robust capital, and focus on organic growth, EFG is well-positioned to capitalize on selective opportunities.

The broader M&A rebound in late 2025 hinges on:
1. Tariff negotiations: Reducing the U.S. policy uncertainty index.
2. Interest rates: Projected cuts of 50–100 basis points by year-end could ease financing costs.
3. Sector resilience: Tech and healthcare will remain bright spots, while industrials lag.

For investors, the lesson is clear: In a scarce M&A environment, strategic focus and financial flexibility—not just deal volume—will determine winners. EFG’s approach offers a blueprint for navigating this new reality.

Data sources: EFG International reports, S&P Global, and U.S. Economic Policy Uncertainty Index.