Four M&A trends expected to fuel rebound in deals for 2025
Mergers and acquisitions (M&A) have had a mixed year in the past twelve months, but new research suggests that deal activity will see a rebound in 2025. Gabe Langerak, a leader at WTW, reveals four trends that will drive a significant portion of the market’s growth trajectory.
One of the trends expected to shape the M&A landscape in 2025 is the consolidation and rise of mid-market deals. With a shortage of high-quality M&A targets in 2024, companies find themselves with a record cash surplus that needs to be utilized. The focus will be on core revenue-generating functions that enhance competitiveness, along with divestment of non-core assets. In 2025, mid-market M&A activity is predicted to surge due to margin pressure, the pursuit of scale, and the need for inorganic growth to speed up digital transformation. Private equity buyers are also likely to engage in carve outs and spin-offs to create value.
Another significant trend in 2025 will be the moment where Artificial Intelligence (AI) revolutionizes the M&A process. The use of AI and other technology in dealmaking is advancing rapidly as companies aim to integrate AI capabilities such as automation, cloud computing, and cybersecurity to stay ahead in a digital-first environment. The year 2025 could be the turning point for AI, where its real value is recognized for streamlining resource-intensive M&A processes like target identification, due diligence, and integration.
Economic stabilization is another key trend to watch out for in 2025. Improving economic conditions and market sentiment in regions beyond the GCC will provide buyers with the much-needed predictability to plan their financing. This stability will create a more favorable environment for deal activities, especially for mid-sized companies that rely on borrowing. Additionally, strong equity markets and positive economic outlooks often correspond with high CEO confidence, further boosting M&A transactions.
Furthermore, the regulatory environment will play a crucial role in shaping M&A deals in 2025. With the anticipation of reduced regulation, dealmakers approach new policies cautiously, waiting to see which ones are enacted by the incoming administration. Sectors like finance and pharmaceuticals, which are heavily regulated and may witness a relaxation of antitrust oversight, are likely to experience increased M&A activity as a result.
In conclusion, 2025 is expected to witness a significant rebound in M&A activity, driven by trends such as mid-market deals, AI integration, economic stabilization, and regulatory changes. These factors will shape the landscape and provide opportunities for companies looking to expand through strategic acquisitions. As the market dynamics evolve, adaptability and strategic planning will be essential for successful dealmaking in the coming year.
