What can we expect from the mergers and acquisitions (M&A) market? What are the M&A trends for 2025? Are there reasons for optimism? Which sectors could drive the activity?
We leave behind 2024, a year in which deal volume among small and midsize companies fell 18% globally, while deals worth more than $1 billion rose 17%, according to PwC. These figures need context, since large deals account for only 1% of the roughly 50,000 deals announced last year.
Looking ahead to the year that has just begun, the 2025 M&A trend reports from three of the Big Four see signs for optimism and expect the mergers and acquisitions market to regain momentum. There are several tailwinds, although geopolitics could change the course:
Macroeconomics and monetary policy
PwC, EY, and KPMG expect a “more promising” year thanks to monetary policy, with some central banks cutting interest rates. This new phase means cheaper financing conditions.
Admittedly, rates are not at the near-zero levels where they stayed for a decade after the financial crisis until 2022, when a cycle of hikes began to rein in inflation that soared first because of the end of lockdowns and then because of the war in Ukraine.
Even so, this is a normalization of monetary policy that, according to market consensus, will leave rates at 2% in the eurozone and 3.5% in the US next year.
High liquidity in private equity
And precisely, “greater stability in interest rates, combined with slowing inflation and a record amount of dry powder (the cash reserves or liquid assets available for investment), have brought an increase in private equity activity”, notes KPMG in its report “M&A Outlook 2025: Picking up momentum.”
“The liquidity available to funds and large companies, and the need for private equity firms to rotate their portfolios to return capital to their investors, lead us to expect transactions to take off in the coming year, as long as we enjoy reasonable stability, both in Spain and globally, and geopolitical issues don't complicate the picture,” says Juan López del Alcázar, Managing Partner of Strategy and Transactions at EY Spain, agreeing on the reasons for the rebound in an article on M&A trends for 2025.
For its part, PwC's report “2025 Outlook: Global M&A Industry Trends” highlights that companies with higher valuations (especially the largest in the S&P 500) can use their stock as part of an inorganic growth strategy. “We could also see an increase in cross-border deals, as US companies, boosted by a strong dollar, look for opportunities abroad, especially in Europe,” it explains.
The most dynamic sectors
Companies need to transform to bring artificial intelligence into their processes, achieving greater efficiencies and new revenue opportunities. That forces them to build muscle and/or acquire tech companies that can help them adapt to this disruption faster. The race is accelerating, driven by the new US administration's push to lead in this technology and by the emergence of DeepSeek.
“The AI wave is a factor that could significantly affect M&A at both the company and market level as a catalyst for change and reinvention,” says PwC, adding that expectations around its transformative capabilities are extremely high.
It also expects “strong” growth in deals in the technology, media, and telecommunications sectors, driven by the rise of artificial intelligence.
Other sectors the consulting firms cite in their 2025 M&A trend reports include:
- Infrastructure, especially in relation to cities and population growth
- Financial services, driven by the need for scale and innovation.
- Consumer and retail, focused on large divestitures of business units.
- Energy, due to the unstoppable shift toward sustainability
- Healthcare and pharma, favored by regulation
All in all, although several tailwinds are aligned, experts also warn that uncertainties remain and could upset the favorable outlook.
