Global M&A market set for rebound in 2025 as challenges decrease
The Mergers & Acquisitions (M&A) market witnessed a significant uptick in 2024, with total deal value reaching $3.5 trillion, a $300 billion increase from the previous year. However, experts predict an even more promising outlook for 2025, marking a notable turnaround after three years of subdued M&A activity. Factors contributing to this positive shift include the easing of key inhibitors such as interest rates and regulatory challenges, creating a conducive environment for increased dealmaking.
Les Baird, a partner at Bain & Company, emphasized the cyclical nature of M&A activity, stating that the market is primed for an upturn. Despite a modest recovery in 2024, overall deal value remained historically low in relation to global GDP due to prevailing headwinds that hindered dealmaking in recent years. As these obstacles diminish, more companies are expected to engage in M&A activity, driving momentum in the market.
In 2024, corporate deals saw a 12% increase in value, while financial acquisitions surged by 29%. Strategic acquisitions, characterized by larger deal sizes, led to a 15% rise in total M&A deal value. Companies and private equity funds adapted their M&A strategies to navigate the challenging landscape, prioritizing concrete value creation, revenue, and cost synergies to drive success in a competitive market environment.
While some industries like technology, healthcare, and life sciences faced challenges, most sectors experienced growth in deal value. The energy sector witnessed significant consolidation, with total deal value surpassing $400 billion, a three-year high. Retail and financial services sectors also saw notable increases in deal value and volume, with banking and finance leading the way in deal activity.
Looking ahead to 2025, Bain & Company anticipates increased deal activity driven by a growing demand for strategic acquisitions. Companies are increasingly turning to M&A as a tool to navigate economic uncertainties, supply chain disruptions, technological advancements, and geopolitical tensions, underscoring the strategic importance of M&A in shaping business outcomes.
Technology disruption is expected to play a significant role in shaping the M&A landscape in 2025, with companies seeking to acquire new capabilities to enhance competitiveness. Generative AI, automation, cloud computing, and quantum technologies are among the key areas of focus for businesses looking to stay ahead in a rapidly evolving market. Financial sponsors are also eager to deploy capital and assets, with many funds preparing to capitalize on the resurgence of the market and favorable valuations.
In conclusion, M&A activity is poised for a resurgence in 2025, fueled by improved market conditions, growing demand for strategic acquisitions, and technological advancements shaping the business landscape. As companies seek to navigate a complex and evolving global economy, M&A is increasingly becoming a central pillar of business strategy, enabling organizations to innovate, grow, and stay competitive in a dynamic market environment.
