Business Trends to Look out for in 2025

Hey Everyone! 🌍 Let’s Dive into the Big Picture!

Today, we’re unpacking the latest macroeconomic shifts and how they’re shaking things up. Stay tuned as we explore the ripple effects on the global stage! 💡📊

1. 🧠 Tech Trends 2025: Generative AI Goes Mainstream
   AI is stepping up its game, powering everything from creative design to smarter workplaces. It's no longer a trend—it's the future!

2. 💎 Luxury Market 2025: Slowing Down
   Sales growth is slowing, and geopolitical uncertainty is making waves. Luxury brands are focusing on sustainability and digital innovation to stay ahead.

3. 🚗 Automotive Trends: All Eyes on 2025
   EVs and autonomous driving are the hot topics, with big shifts in regulation and supply chains shaking things up.

4. 💼 Private Capital: A New Era for Wall Street
   Private equity is eyeing new markets, including individual investors. Deregulation could open big doors—let the competition begin!

5. 🌱 Renewable Energy: Shifting Tides
   Higher interest rates and political changes are challenging the renewable energy sector, but green energy is still powering forward with tech and lower costs.

✨ A quick glance at 2025: tech, luxury, cars, capital, and green energy are all in for some exciting changes!

Law firms merger between Troutman Pepper Hamilton Sanders and Locke Lord took effect on January 1, 2025.  

Technology

Upcoming Trend: In 2025, generative AI is set to move from deeper to wider as more countries and companies seek to control what they see as a strategically important technology.

The Rise of “Sovereign AI”

Countries are stepping up and building their own AI infrastructure to protect their economies and national security. Nvidia, a leading chipmaker, already gets 10% of its revenue from governments investing in AI tech, and that number is growing. Open-source models like Meta’s Llama also empower companies to create their own AI systems using private data, marking a new phase of decentralisation.

Company to Watch: xAI

Elon Musk may have been late to the generative AI party, but he's making up for the lost time. His startup, xAI, has already raised $12 billion and reached a valuation of $50 billion. Musk’s knack for assembling top engineering talent has quickly made xAI a major competitor.

With Musk’s influence and close ties to a returning Trump administration, xAI could become a critical player in shaping the future of AI in the US. Meanwhile, OpenAI, the original pioneer of generative AI, continues to expand its business. But Musk’s political clout and xAI’s rapid rise make it a company to watch.

Biggest Risk: An AI Bubble?

AI valuations are skyrocketing, but here’s the catch: many businesses and governments still haven't figured out how to use generative AI profitably. This gap between investment and real-world application could create a tech bubble. In 2024, Wall Street kept faith despite warning signs, but 2025 might test investors’ patience.

Biggest Surprise: Microsoft Buys OpenAI?

Imagine this: Microsoft cements its partnership with OpenAI by buying it outright. Andrew Ferguson, the new FTC chair under Trump, has hinted at supporting mergers that drive industrial progress, potentially opening the door for such a deal. But Sam Altman, OpenAI’s ambitious CEO, dreams of building the next tech giant and may not be eager to sell.

In Summary

From governments building AI infrastructure to Musk’s xAI shaking up the field, 2025 will be a year of big moves and even bigger risks in generative AI. Whether it’s the rise of sovereign AI, a potential tech bubble, or surprising acquisitions, the AI world is set to remain as unpredictable as ever.

How does it impact Law Firms?

1. Increased Demand for AI Expertise: Law firms will need to understand and navigate the legal and regulatory frameworks surrounding AI. With governments investing in sovereign AI and companies developing proprietary models, firms specialising in technology, IP, and regulatory law will see an increased demand for advising on:

• Data privacy and usage rights.

• Compliance with national and international AI laws.

• IP disputes related to AI models and outputs.

2. New Opportunities in Mergers and Acquisitions: Potential mergers, like Microsoft acquiring OpenAI, highlight how generative AI is reshaping industries. Law firms with strong M&A practices will be pivotal in advising on:

   High-stakes tech acquisitions.

   Competition law and antitrust implications, particularly under less traditional regulatory approaches.

3. Pressure to Adopt AI internally: To stay competitive, law firms themselves will adopt generative AI to streamline processes such as:

• document review and contract drafting.

• Legal research and case preparation.

• Client communication and personalised service delivery.

Luxury

Trend to Watch: China’s Recovery

China has been engine-driven in sales, but its recent economic slowdown has sent shockwaves through the industry. A revival in China’s economy—whether through property market improvements or government stimulus—could bring must-needed relief.

Global luxury sales remained flat in 2024, marking a stark contrast to years of robust growth. For 2025, analysis at Bain predicts the first significant slowdown in personal luxury goods since the 2008 financial crisis. with price hikes no longer a viable strategy, luxury brands will need to:

• Focus on entry-level products to attract middle-class buyers.

• Invest in experiential luxury offerings, which remain a bright spot.

• Get more creative with marketing and customer engagement.

Company to Watch: Kering

Kering, the parent company of Gucci and Saint Laurent, has been struggling to keep pace with its competitors. Gucci, once a powerhouse, has lost its shine. In response, Kering appointed a new CEO and creative director tasked with revitalising the brand.

While the company warns that the turnaround will take time, there’s mounting pressure to show results. With Kering’s stock down 40% in 2024 and Saint Laurent also showing signs of weakness, some speculate that an activist investor could step in to shake things up.

Biggest Risk Trade Wars

Donald Trump’s re-election has brought uncertainty to global trade. His administration has already floated the idea of imposing tariffs of up to 20% on goods from US allies, with potentially even higher charges for Chinese imports.

While luxury goods may not be direct targets, Trump’s unpredictability leaves no room for complacency. The bigger danger lies in the ripple effects:

• High tariffs on China could trigger a global economic slowdown, making luxury items like handbags and champagne harder to sell.

• Rising costs and disrupted supply chains could force brands to rethink their global strategies.

Biggest Surprise: Leadership Shake-Ups or Mega-Deals

In an industry dominated by tight family control, large-scale mergers are rare. However, a surprising mega-deal or a generational leadership change at one of the giants like LVMH or Richemont could reshape the landscape. While many leaders show no signs of stepping aside, 2025 could still bring unexpected moves.

What It Means for the Industry

Luxury brands face a year where resilience and innovation will be key. With economic uncertainty and slowing growth, the focus will shift to creative strategies, operational agility, and bold leadership decisions to navigate the challenges ahead.

How does it impact Law firms? 

1. Increased Demand for Trade and Regulatory Expertise: Trump’s tariffs on imports lead to disputes over international trade agreements. Law firms specialising in international trade and customs law may see increased demand for their services to help luxury brands navigate new regulations, mitigate costs, or challenge tariffs. Luxury brands might seek advice on diversifying supply chains or relocating manufacturing to minimise geopolitical risks.

2. Growth in M&A and Restructuring Work: Speculations about mergers, acquisitions, or activist involvements (e.g. Kering) could drive significant transactional work. Law firms with strong corporate practices will likely be engaged to structure deals, conduct due diligence, and manage shareholder negotiations. As luxury brands explore partnerships to enhance experiential offerings or enter new markets, law firms may be involved in drafting joint venture agreements or licensing contracts.

3. Intellectual Property and Branding Disputes: With Luxury brands leaning on innovation to attract customers, protecting IP will become more critical. Firms with expertise in IP law may assist with:

• Trademark registrations for new products

• protecting trade dress and designs

• resolving disputes over counterfeit goods, which could rise amid economic challenges

Automotive

Slowing Electric Vehicle (EV) Growth

In 2024, carmakers faced challenges with slowing EV sales worldwide. Industry leaders are split on what comes next. Some believe EV production was intentionally delayed, anticipating stricter European emissions rules in 2025. This could mean a significant increase in EV availability next year and a decline in internal combustion engine (ICE) vehicles. Others, however, think consumers remain hesitant due to concerns about EV reliability and affordability.

EVs accounted for about 20% of global car sales in 2024, with the biggest growth in China. The future of this market share depends on government support. Subsidies will play a critical role, especially as the US contemplates rolling back EV incentives under new policies.

Company Spotlight: Tesla

Tesla’s stock surged nearly 70% following the US election, thanks to optimism about its CEO Elon Musk, potentially influencing national policies. However, the company’s path forward remains uncertain. California might exclude Tesla from new EV tax rebates, and Tesla’s supply chain—closely tied to China—could face challenges from potential tariffs on imports.

Meanwhile, Musk is shifting focus to autonomous vehicles and AI. If Tesla delivers on its ambitious self-driving “Cybercab", it could reshape the automotive industry.

Biggest Risk of 2025

The automotive supply chain is under strain. Parts shortages disrupted production in 2024, and smaller suppliers are at risk of bankruptcy due to sluggish sales. Some large carmakers have stepped in with financial support, but as profits shrink, maintaining this assistance might prove difficult.

The Surprise Shake-Up

In a surprising twist, Stellantis CEO Carlos Tavares stepped down in 2024 after financial challenges hit the company, the world’s fourth-largest carmaker. While no successor has been named, speculation is rife. Stellantis Chair John Elkan, known for his eye for talent, might surprise the industry with an unexpected choice of the role.

Looking Ahead

As we move into 2025, the automotive sector faces pivotal moments, from EV adoption to navigating supply chain disruptions. Stay tuned for how these challenges and opportunities shape the road ahead.

How does it impact Law firms? 

1. Regulatory and Compliance Work: As Europe implements tougher emissions regulations in 2025, carmakers will need legal support to navigate compliance. Law firms specialising in environmental law will likely see increased demand for guidance on meeting these new standards.

2. Corporate and M&A activity: The financial struggle of smaller parts suppliers may drive mergers and acquisitions or even lead to bankruptcies. Law firms with expertise in insolvency and restructuring or M&A will play a key role in managing these transactions. High-profile leadership changes, like Stellantis’ CEO resignation, often precede organisational restructuring, strategic pivots, or shareholder disputes. Corporate lawyers will likely assist with these transactions.

3. Trade and Tariffs: Tesla and other manufacturers with complex international supply chains, especially those reliant on China, will require legal assistance navigating tariffs or sanctions. Trade lawyers will be in high demand to structure agreements that minimise the impact of such restrictions.

Private Capital

Trend to Watch

Private capital giants like Blackstone, KKR, and Apollo are shifting their focus beyond traditional institutional investors, such as sovereign wealth funds, to target individual retirement savers. This move could reshape the $40 trillion US investment market.

With Trump’s re-election, the state is set for potential deregulations, allowing everyday investors to access illiquid assets like private equity. Key figures from his first term, including Eugene Scalia and Jay Clayton, already laid the groundwork for private equity to expand into the lucrative retirement market. Industry watchers predict that Wall Street’s top players are ready to capitalise on these opportunities.

Company to Watch

Medline Industries, a Chicago-based medical parts supplier, is a prime example of private equity in action. Acquired in 2021 for $34 billion by Blackstone, Carlyle, and Hellman & Friedman, the company has grown steadily despite challenges from rising interest rates.

Now, the private equity firms are preparing Medline for a public offering in 2025 or 2026. If successful, it would validate the buyout industry’s ability to navigate economic turbulence and prove these high-value investments can deliver profitable exits.

Biggest Risk

AI is transforming industries— and private equity isn’t immune. While AI can boost productivity, especially in data-heavy sectors, it also poses risks to software companies that private equity has heavily invested in. Many of these companies rely on recurring subscription revenues, but AI could disrupt their business models by reducing customer demand for their services.

Additionally, rising interest rates remain a persistent threat. The private credit market, which funds many buyouts, has held up so far, but sudden spike in rates could strain highly leveraged deals.

What could surprise us?

Trump’s return to the White House has infused Wall Street with optimism, driving a pickup in takeover activity. But this bullish mood could face hurdles. Potential tariffs and restrictions on low-wage migrant labour drive inflation, derailing growth. If interest rates climb sharply, Wall Street’s ability to sustain its leverage-heavy strategies might be tested.

How does it impact Law firms? 

1. Increased Private Equity Activity: The expansion of private equity into the retirement savings market will lead to a surge in deal-making, fund structuring, and compliance requirements. Law firms with strong private equity practices will see:

   Increased Demand for Transactional Work: Advising on acquisitions, investments, and exits like Medline Industries' IPO preparations.

   Regulatory Advisory Needs: Navigating potential deregulation under the Trump administration while ensuring compliance with existing laws.

2. AI Integration Risks: AI’s impact on the software sector poses legal challenges for private equity firms, particularly around:

   Due Diligence: Law firms will need to assess the resilience of software companies’ business models in light of AI-driven disruptions.

   Intellectual Property (IP): Advising on protecting proprietary technologies and negotiating complex IP-related terms in transactions.

3. Complex Regulatory Environment: Potential deregulation could simplify some processes but increase uncertainty for others, requiring:

   Proactive Monitoring: Law firms must stay ahead of policy changes to advise clients effectively.

   Cross-Border Expertise: Tariffs and trade restrictions could impact deals involving international entities, increasing demand for global regulatory insights.

Renewable Energy

Trend to Watch: Renewables Going Private

Renewable energy companies are reconsidering public markets. With higher interest rates and cautious investors, some groups like ReNew are opting for private ownership after disappointing public market performance. Recent deals include Allete’s $6.2 billion buyout by Global Infrastructure Partners and CPP Investments, and Brookfield and Temasek’s purchase of Neoen. 

Private Investors seem more optimistic about renewables, valuing these assets differently than public markets. This trend could lead to more companies delisting in 2025, as public market enthusiasm lags behind the sector’s potential.

Company to Watch: RWE

German utility giant RWE, known for ambitious green energy goals, is shifting gears. the company has reduced spending on renewables for 2025, focusing instead on €1.5 billion share buyback programme after its stock dropped 30% in 2024.

RWE cites risks like Trump’s potential re-election and its impact on the US offshore wind industry as key factors influencing its cautious approach. Despite these challenges, RWE’s commitment to a 65-gigawatt green energy portfolio by 2030 remains a critical marker for the sector’s progress.

Biggest Risk: Trump’s Return to Power

Trump’s campaign pledges to end US offshore wind projects cut subsidies for green energy, and withdraw the US from the Paris Climate Agreement cast uncertainty over the renewables sector. While the Inflation Reduction Act has spurred investments, particularly in Republican states, Trump's policies could limit its benefits.

Additionally, proposed tariffs under his administration could increase the costs of batteries, solar panels, and other key equipment, potentially slowing the sector’s growth.

What Would be the Biggest Surprise?

The ongoing energy shift in Europe, prompted by reduced Russian gas supplies post-Ukraine invasion, has supported the renewables push. However, Trump’s vow to end the war “very quickly” raises the possibility of increased Russian gas flows to Europe.

While this may seem unlikely, analysts suggest Europe might need Russian gas in the near term, even as renewables remain a priority. This unexpected development could alter the pace of Europe’s energy transition.

What’s Next?

Renewables are navigating a complex environment, balancing investor caution, geopolitical risks, and shifting market dynamics. While private ownership and innovation provide opportunities, the sector faces significant challenges, making 2025 a pivotal year for its evolution.

How does it impact Law Firms?

1. Increased Private Equity Activity in Renewables: The shift from public to private ownership in renewables will generate more private equity deals, such as acquisitions, buyouts, and delistings. Law firms will see heightened demand for legal advice on:

   • M&A transactions: Structuring, negotiating, and closing deals.

   • Regulatory compliance: Navigating the complex regulatory frameworks governing energy projects.

   • Due diligence: Evaluating assets, risks, and environmental liabilities.

   Firms with expertise in renewable energy transactions and private equity will be well-positioned to benefit.

2. Infrastructure and Financing Work: As renewable companies seek private financing, law firms will be engaged in structuring project finance deals, including:

   • Drafting agreements for joint ventures and partnerships.

   • Advising on tax-efficient structures and subsidy impacts.

   • Assisting with cross-border investments and international arbitration.

   This trend aligns with firms experienced in energy project financing.

3. ESG and Sustainability Advisory: Renewables remain central to ESG (Environmental, Social, and Governance) initiatives. Law firms will assist clients in:

   • Meeting sustainability targets amidst changing political landscapes.

   • Disclosing ESG-related metrics in compliance with global standards.

   • Resolving issues arising from greenwashing claims or activist litigation.

   Firms with ESG expertise will be critical partners for renewable companies navigating public and private markets.

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