Merger and acquisition (M&A) activity is projected to gain traction in 2025, supported by improved economic conditions, curbed inflation, and stabilised interest rates, according to WTW’s Quarterly Deal Performance Monitor (QDPM).
Research from WTW highlights a steady rise in deals valued at over $1 billion over the past year, bolstering corporate confidence as companies look to capitalise on a more stable environment.
Jana Mercereau (pictured above), head of Europe M&A Consulting at WTW, has identified five trends expected to shape the M&A landscape in 2025, ranging from the impact of artificial intelligence (AI) on dealmaking to geopolitical risks and regulatory developments.
According to WTW data, consolidation in core revenue-generating sectors and the divestment of non-core assets will drive mid-market M&A activity in 2025. Mercereau noted that a lack of high-quality M&A targets in 2024 left many corporates with substantial cash reserves, which they are now poised to deploy.
Private equity buyers are also expected to benefit from this shift, viewing mid-market carve-outs and spin-offs as opportunities for value creation. Factors such as margin pressure and the pursuit of scale and digital transformation are anticipated to fuel this trend.
Mercereau pointed to the increasing role of AI and other digital technologies in advancing dealmaking. She said companies are seeking to integrate AI capabilities, including automation, cloud computing, and cybersecurity, as part of broader digital transformation efforts.
AI’s potential as a tool for streamlining resource-intensive M&A processes, from target identification to due diligence and integration, may make 2025 a pivotal year for its adoption in dealmaking. Mercereau noted that while AI’s hype is significant, its true value to the M&A process may become clearer in the coming year.
Improved economic conditions and steady equity markets are expected to support deal activity in 2025, particularly among mid-sized companies reliant on financing. Mercereau emphasised that stabilised markets would provide a stronger foundation for planning and executing transactions, correlating with higher CEO confidence and a positive economic outlook.
While political instability is anticipated to decrease following a year of significant elections worldwide, Mercereau said geopolitical factors will continue to shape the M&A landscape. She highlighted ongoing conflicts in Ukraine and the Middle East, as well as complexities arising from the US-China trade relationship, as key considerations for dealmakers in 2025.
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Changes in regulatory policies under the new US administration could also influence M&A activity. Mercereau suggested that sectors like finance and pharmaceuticals, which are subject to high levels of antitrust scrutiny, may experience increased deal flow if regulatory oversight loosens.
However, she cautioned that dealmakers are likely to adopt a measured approach, awaiting clarity on policy changes.
“There is already a clear consensus emerging that the M&A market is poised for a significant uptick in 2025, with technology-driven deals at the forefront,” Mercereau said. She noted that the implications of the “super election” year of 2024 would extend well into the future, shaping the global M&A landscape.
The combination of economic stability, advancing technology, and shifting regulatory and geopolitical factors is expected to create a dynamic environment for M&A in the year ahead. Companies are likely to navigate these opportunities with a focus on consolidating core assets and leveraging digital transformation to enhance competitiveness.
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