Private Equity Focuses on Mid-Market M&A Carve-Outs in 2025
Merger and acquisition (M&A) activity is on the rise for 2025, with many companies looking to expand and capitalize on a more stable economic environment. According to WTW’s Quarterly Deal Performance Monitor (QDPM), deals valued at over $1 billion have been steadily increasing, boosting confidence among businesses.
Head of Europe M&A Consulting at WTW, Jana Mercereau, predicts five key trends that will shape the M&A landscape in 2025. These trends include the impact of artificial intelligence (AI) on dealmaking, geopolitical risks, and regulatory developments.
In 2025, mid-market M&A activity is expected to be driven by consolidation in revenue-generating sectors and the divestment of non-core assets. Many companies have significant cash reserves from 2024 due to a lack of high-quality M&A targets. This year, these companies are poised to deploy these reserves for strategic acquisitions.
Private equity buyers are also expected to benefit from this trend, especially in mid-market carve-outs and spin-offs. Factors such as margin pressure and the push for scale and digital transformation are set to fuel this movement.
AI and digital technologies are increasingly playing a vital role in dealmaking. Companies are looking to integrate AI capabilities, such as automation, cloud computing, and cybersecurity, as part of their digital transformation efforts.
Moreover, economic stability, along with geopolitical trends, are expected to support deal activity in 2025. Stabilized markets will provide a strong foundation for executing transactions, boosting CEO confidence and overall economic outlook.
Despite potential political instability and ongoing geopolitical issues, the M&A landscape seems optimistic for the upcoming year. Changes in regulatory policies under the new US administration could impact sectors like finance and pharmaceuticals, potentially leading to increased deal flow.
Overall, the outlook for M&A in 2025 is positive, with technology-driven deals at the forefront. The combination of economic stability, advancing technology, and regulatory changes is expected to create a dynamic environment for businesses looking to enhance their competitiveness through digital transformation and strategic acquisitions. What are your thoughts on these developments in the M&A landscape? Feel free to share your comments below.
