M&A in 2025: Trends, Sectors, and Strategies for a Dynamic Year Ahead

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Vlad Zghurskyi

03.12.2024

5 Min Read

"With over $70 billion in megadeals already announced, 2025 promises to be a pivotal year for mergers and acquisitions. As dealmakers navigate political uncertainties and shifting market dynamics, the question remains: Can the momentum persist?"

2025 is shaping up as a pivotal year for M&A. With elections shaking up U.S. policy and new deals shaping global markets, the question remains: will momentum persist or stall? CEOs and investors are weighing optimism against political and regulatory headwinds.

As the dust settles from a whirlwind 2024, the M&A landscape is primed for a decisive 2025. Megadeals like Mars snapping Kellanova for $36 billion and Capital One acquiring Discover for $35 billion have signalled a bold resurgence in activity.

Yet, headlines warn of regulatory and political pushback, from FTC lawsuits to campaign trail criticism. With U.S. elections reshaping priorities and global dealmakers riding strong momentum, one burning question looms: what’s next? Let’s find out!

Global Trends Driving M&A Growth

M&A activity sharply declined in early 2024, with just over 23,000 deals — a stark drop from the 34,000 peak in late 2021. High interest rates, falling valuations, and global volatility have been key culprits, but these challenges are easing in some regions, giving hope for a rebound.

Three trends that may help boost deal volume:

Companies prioritize deals that strengthen their core operations like pharma firms teaming up with biotech innovators.

PE firms shift from market-timing to investing across cycles, favouring smaller, strategic acquisitions over blockbuster deals.

Record take-private activity continues, allowing public companies to innovate away from market pressures and deliver returns for PE investors.

Source: Imaa

M&A Dealmakers in the U.S. Will Be Cautious

A second Trump administration is likely to roll back the stricter merger rules introduced in late 2023 by the FTC and DOJ. These rules lowered the bar for what counts as anticompetitive, putting more deals under the microscope and slowing activity in key sectors.

It means that many dealmakers have to introduce a more cautious approach.

Sector Spotlight: Where the Deals Are Happening

Digital transformation and ongoing investments in AI will undoubtedly maintain technology’s stronghold on the M&A landscape in 2025. Expect significant deals focusing on AI, cloud services, and cybersecurity to shape the year’s business landscape.

Rising costs and relentless biotech advancements are set to keep the healthcare sector active in M&A, with a sharp focus on telemedicine and pharmaceuticals.

As industries ramp up their ESG efforts, deals targeting clean energy and sustainability are poised to grow, particularly in renewable energy and carbon capture solutions.

The push for sustainable transportation continues to accelerate, spurring increased activity in electric vehicle infrastructure, battery innovation, and autonomous technology investments.

The banking and fintech sectors are likely to see more consolidation as companies pursue scale and operational efficiency through mergers.

On the other hand, if you take a look at the specific markets, you will see slight differences:

Source: Datasite

Private investment is set to claim an even larger slice of capital markets activity, including M&A, as innovative vehicles provide new ways to generate liquidity, monetise returns, and hold investments longer.

PE firms are adapting to the current rate environment by leveraging private credit, forming consortiums, and using hybrid capital. Recent advancements in deal-making technology are also making these strategies more accessible and effective. Here are some stats that explain the tendency:

Source: Chief Executive

Private Equity's Evolving Role

Private Equity – Private equity is set to be a major driver of M&A growth in 2025, with firms eager to deploy $2.5 trillion in dry powder. This momentum persists despite the challenges of lower valuations and a slower pace of deal activity.

Nearly 75% of dealmakers report that businesses are integrating AI, acquiring AI-driven firms, and using the tech to streamline M&A processes;

With 77% seeing increased scrutiny, 80% of dealmakers have ramped up due diligence efforts over the past year;

Over 50% predict a stronger automotive M&A market, fueled by hybrid engines, resilient supply chains, and partnerships with tech firms;

Just 55% now prioritise ESG in dealmaking, a sharp drop, with one-third saying they likely won’t screen for ESG risks.

Strategies for Success in 2025

M&A in 2025 is shaping up to be quite a game, and these strategies can help dealmakers stay ahead:

Slower exits test leadership, especially in PE-backed companies. CEOs must manage expectations while navigating repeated starts and stops in the selling process, often under pressure to drop valuations.

Post-close execution often lags in preparation but holds the key to the deal’s success. Launching integration strategies immediately after the announcement is no longer optional — it’s essential.

Most deals stay close to the acquirer’s core business, but adjacent plays can deliver significant returns with proper planning. Success hinges on showing how growth synergies and topline innovations will materialise.

Lengthy regulatory approvals can destabilise teams. Companies must plan carefully for prolonged timelines to maintain focus and avoid disruptions.

Conclusion

Private equity’s typical three-to-five-year holding period aligns with investments made in 2020 and 2021, signalling potential exits ahead. This could inject fresh energy into a sluggish market, with growth-focused sectors like biotech, renewable energy, and fintech in the spotlight.

Geopolitics remain a factor, with domestic tax reforms on hold and a pivotal election looming in late 2024. Globally, while tensions persist in Ukraine and the Middle East, cross-border deals between the U.S., Europe, and Asia are expected to grow, especially in energy, infrastructure, and tech.

Despite lingering challenges, analysts foresee a gradual M&A rebound, fueled by emerging opportunities and strategic industry moves.

As the M&A landscape evolves, agility and foresight will define the winners in 2025. Whether you’re navigating regulatory hurdles or capitalising on emerging opportunities, preparation is key. Contact Mergewave Capital if you need M&A assistance in your next deal. Are you ready to seize the year?

M&A 2025

M&A Trends

Global Mergers

M&A Outlook

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