BrazilGlobal M&A market poised for a comeback in 2025 as headwinds ease
The global value of mergers & acquisitions (M&A) in 2024 closed at $3.5 trillion, up $300 billion on the year previous. The signs for 2025 are however a lot more positive, according to Bain & Company research.
After three years of underwhelming M&A activity, following the record-breaking 2021 on the back of mega-mergers and heightened tech deal activity, 2025 is set to see a notable turnaround in dealmaking fortunes. The main reason? “The two biggest inhibitors to recent deals – interest rates and regulatory challenges – will ease in 2025,” said Les Baird, partner at Bain & Company.
“M&A activity tends to be cyclical, and we believe the market is poised for an upturn,” he continued. “While we saw a modest recovery last year, deal value remains historically low as a percentage of global GDP as headwinds have stifled dealmaking for the past three years. Now, as headwinds become less acute, more companies will turn to M&A activity.”
In 2024, the total value of corporate deals rose by 12%, while financial acquisitions rose by 29%. With the average deal size of strategic acquisitions notably larger, that meant that overall M&A deal value went up by 15% to around $3.5 trillion.
Bain & Company highlighted that, in a challenging environment, both companies and private equity funds adapted their M&A strategies to the realities of the market. “Strategic acquirers were more selective in their deals, required more concrete value creation, were less willing to pay for long-term top-line growth, and, most dramatically, adjusted to the new M&A value equation by pursuing both revenue and cost synergies in tandem,” said Baird.
By industry
The report found that longtime M&A stalwart industries, such as technology, healthcare and life sciences, remained well underwater compared with their vibrancy just a few years ago.
However, most sectors saw growth in deal value. In the energy sector, a large wave of consolidation led to a total deal value of over $400 billion, a three-year record. The retail sector saw a rebound in value and volume, while total deal value in the financial services market grew to $309 billion in 2024, with banking and finance accounting for the largest share of deals, and cards and payments notching the biggest growth.
The outlook for 2025
Beyond the two key factors of interest rates and regulatory challenges, Bain & Company said that deal activity in 2025 will be buoyed by a growing intrinsic demand for deals. At a time when most companies are urged to refresh or even revamp their business models, turning to deals to accelerate transitions or buy new capabilities has become an increasingly popular approach.
“M&A is nowadays central to business strategy, as companies seek pathways to navigate uneven economic outlooks, supply chain shocks, technology disruption, and geopolitical tensions,” Baird said.
In particular technology disruption is expected to drive a sizeable pipeline of 2025 deals. “Generative AI, automation, cloud and quantum computing are just a few of the technologies that companies will need to build or buy to maintain their competitiveness. Tech and non-tech companies alike will have voracious appetites for tech deals to retool their businesses.”
Additionally, financial sponsors are eager to put money and assets to work. Many funds have assets which they wish to sell once the market comes back and valuations rise, and have piles of dry powder which they are pressured to move around.
In other findings of its report, Bain & Company said it expects one in three M&A practitioners to be using generative AI in dealmaking by the end of the current year.
