Key Takeaways:
- Regulatory shifts could reduce compliance burdens and drive increased interest in alternative investments.
- Market activity is expected to accelerate, particularly in private equity and M&A.
- Potential corporate tax cuts may incentivize onshoring and impact strategic decision-making.
—
As 2025 unfolds, asset managers are adapting to the new administration’s policy shifts and preparing for potential changes in tax regulations, federal oversight, and economic conditions. Early indications suggest a more favorable regulatory environment, with lower compliance burdens and increased market activity, particularly in M&A and private equity.
However, uncertainty is still about the pace and scope of these changes. While some policies may take effect quickly, others could face legislative hurdles or evolve over time. Asset managers must stay agile, conduct scenario planning, and position themselves strategically to capitalize on opportunities while mitigating risks.
Regulatory Outlook: What Asset Managers Should Expect
Leadership transitions at key regulatory agencies, including the Securities and Exchange Commission (SEC), Federal Trade Commission (FTC), and Internal Revenue Service (IRS) are already shaping regulatory enforcement, compliance expectations, and market oversight.
Potential impacts include:
- Eased SEC regulations, reducing compliance burdens, particularly for digital assets and ESG-related disclosures.
- A more permissive FTC stance, potentially fueling increased M&A activity.
- IRS adjustments, using automation to support oversight even if funding changes occur.
While deregulation may streamline operations, firms must keep a long-term compliance perspective. Future administrations may reinstate policies, making regulatory a competitive advantage.
Market Activity: Private Equity and M&A in 2025
With interest rates stabilizing and private equity (PE) firms holding record levels of dry powder, M&A activity is poised for an uptick. Key trends include:
- More PE and venture capital exists, as firms seek liquidity.
- Energy sector opportunities, driven by reduced ESG regulations and domestic production initiatives.
- Increased cross-border transactions, depending on tariff and trade policy adjustments.
For asset managers, deal sourcing, risk assessment, and scenario modeling will be essential in capitalizing on new opportunities while hedging against market volatility.
Corporate Tax Policy: Preparing for Potential Rate Changes
The administration has proposed extending expiring provisions from the Tax Cuts and Jobs Act (TCJA) and lowering the corporate tax rate, potentially to 20% or lower for domestic manufacturers. If passed, these changes could:
- Encourage onshoring, influencing supply chain decisions.
- Create tax advantages for companies expanding domestically.
- Shift investment priorities, favoring industries with favorable tax incentives.
- Asset managers should develop multiple tax scenarios to prepare for different legislative outcomes, ensuring they stay agile and strategic in decision-making.
How Asset Managers Can Prepare
With new policies taking shape, the timing and impact of key changes stay uncertain. To stay ahead, firms should:
- Monitor regulatory developments and assess potential impacts early.
- Stay initiative-taking in deal sourcing, preparing for increased M&A activity.
- Invest in compliance technology, ensuring adaptability in changing regulatory landscapes.
- Model different tax scenarios, improving portfolio and business strategies.
By taking a data-driven, forward-looking approach, asset managers can position themselves to capitalize on evolving market conditions while supporting resilience in an uncertain regulatory environment.
How MGO Can Help
As regulatory, tax, and financial landscapes shift, asset managers, private equity firms, and institutional investors face new challenges and opportunities. Staying ahead requires strategic planning, informed decision-making, and adaptability to evolving policies.
From tax planning and regulatory compliance to M&A support and investment structuring, having the right insights can be effective. MGO provides guidance and resources to help you navigate these changes with confidence and clarity.