Companies involved in mergers and acquisitions outperformed the broader market by 1.5 percentage points in the first quarter of 2025, marking the first positive result since late 2022, according to WTW’s latest Quarterly Deal Performance Monitor (QDPM).
The report, which evaluates completed M&A transactions based on share price performance, analysed deals valued over US$100 million completed between January and March.
The findings, compiled in partnership with the M&A Research Centre at Bayes Business School, reflect a shift after seven consecutive quarters of underperformance for acquirers. Long-term data indicates that, since the global financial crisis, M&A transactions have outpaced the market by an average of one percentage point.
Regional performance varied widely. North American acquirers underperformed their regional index by 2.2 percentage points in the first quarter, completing 81 deals. This marked the ninth straight quarter of negative results in the region.
Meanwhile, European buyers outperformed their index by 16 percentage points during the same period, despite a drop in deal count from 42 in the prior quarter to 29. UK-based acquirers mirrored this positive trend. Asia-Pacific dealmakers exceeded their regional index by 5.8 percentage points with 44 completed transactions, down from 61 in the last quarter of 2024.
WTW’s head of Europe M&A Consulting, Jana Mercereau (pictured above), said that while 2025 has started positively, ongoing geopolitical tensions and new US tariffs could influence M&A activity in the short term.
The imposition of tariffs has heightened market volatility and economic uncertainty, leading to a cautious approach among companies considering M&A transactions. A Reuters report noted that in the first quarter of 2025, global M&A volume rose by 12.6% to US$984.38 billion, primarily driven by activity in the Asia Pacific region, notably China.
However, the US experienced a 13% decline in M&A volume, dropping to US$436.56 billion during the same period. This downturn is attributed to the unpredictability of trade policies and the potential for retaliatory measures, which have made companies hesitant to engage in significant deals.
While tariffs have introduced challenges, they have also created certain opportunities within the M&A landscape. A report from Edgar Index noted that companies may pursue domestic mergers to achieve economies of scale and reduce reliance on international supply chains, thereby mitigating tariff exposure.
Firms might also seek to acquire companies in regions unaffected by tariffs to diversify their market presence and reduce geopolitical risks.
Businesses are exploring acquisitions that allow for the restructuring of supply chains, aiming to localise production and minimise tariff impacts.
Globally, 163 deals valued over US$100 million were completed in the first quarter of 2025, representing a 22% decline from the 210 recorded in the final quarter of 2024. Despite the quarterly decrease, deal volume has shown a marginal upward trend over the past two years.
The number of large deals – defined as those over US$1 billion – rose year-over-year, with 40 completed in Q1 2025 compared to 34 in the same period last year. Only one mega deal, valued above US$10 billion, was finalised in the quarter, the lowest such figure in two years.
Industry-specific analysis showed that materials (+39.8 percentage points), telecommunications (+29.2 percentage points), and consumer products and services (+13.2 percentage points) led in performance.
Mega deals and large deals also outperformed the market, with gains of 6.9 and 8 percentage points, respectively. Conversely, mid-sized deals, cross-regional and cross-sector transactions, and quick-close deals underperformed.
Mercereau said that pent-up demand, capital availability, and strong balance sheets may drive a rebound in deal activity later in the year.
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