Global M&A market expected to rebound in 2025, according to report
In 2025, the Global M&A market is expected to make a strong comeback after a period of sluggish activity, according to a recent report by Bain & Company. Factors such as easing interest rates and decreasing regulatory obstacles will create a favorable environment for increased M&A deals this year. The report emphasizes the importance of M&A and divestitures for companies to navigate technological disruptions and the changing landscape of globalization.
Businesses are under pressure to seek new avenues for growth due to economic uncertainty, making M&A a critical strategy moving forward. Les Baird, a partner at Bain & Company, expressed optimism about the market’s potential upturn, noting that while the past few years had seen modest recovery, the overall deal value remained low compared to global GDP. As external challenges ease, more companies are expected to engage in strategic M&A activities to adapt and grow successfully.
Despite recent subdued activity, the demand for M&A deals remains robust as companies seek to expand or readjust their operations in response to economic unpredictability, supply chain shifts, and geopolitical factors. Financial sponsors, including private equity firms, are also eager to invest in a stabilizing market. Bain’s report points to a growing lineup of assets available for sale, with various players gearing up for a market rebound, including corporations reassessing strategies and investors seeking liquidity.
Moreover, governments and regulatory changes in the EU and the US are anticipated to create a conducive environment for M&A activity in 2025. Looking towards the future, technology disruption is expected to be a key driver of M&A transactions in the coming years. Generative AI, automation, renewable energy, and quantum computing are among the technologies cited by the report that will shape the strategic landscape of M&A moving forward.
Incorporating generative AI into the M&A process is becoming increasingly prevalent, with a survey by Bain indicating a rise in its usage among professionals. AI tools are expected to enhance dealmaking processes, from sourcing deals to due diligence, thereby reducing timelines for critical activities like integration and divestiture planning. Baird believes that AI will revolutionize how M&A transactions are executed and integrated, significantly streamlining the process.
In 2024, the Middle East experienced a noteworthy increase in M&A activity, with deal values reaching $29 billion. Sovereign wealth funds and government-related entities in the UAE and Saudi Arabia played a predominant role in the region’s M&A scene, with energy and natural resources sectors accounting for the majority of deal value. Significant transactions, such as Saudi Arabian Oil Co’s acquisition of Rabigh Refining & Petrochemical, underscore the region’s transformative year in M&A.
Investors from the Middle East are increasingly looking towards Europe for strategic acquisitions, with a substantial increase in deal value in 2024. In contrast, investments in the Asia-Pacific region saw a sharp decline, indicating a shift in the region’s approach to international acquisitions. With ongoing support from government entities and cross-regional investments, the Middle East is positioned to continue its trend of high-value acquisitions in the years to come.