Gaining momentum

Is the recent uptick in global merger and acquisition (M&A) activity a sign of a more promising M&A landscape in 2025? 

While transaction volumes over the past 12 months have remained below the peak levels of recent years, our latest global transaction report from MHA UK indicates signs of cautious optimism in many parts of the world. Dealmakers are looking beyond recent challenges and uncertainties, with a stabilising macroeconomic environment boosting global investor confidence.  

Flexibility and adaptability will be essential for navigating the evolving and intricate M&A landscape for those businesses aiming to capitalise on growth and innovation opportunities. 

A turnaround year? 

“2024 was the year of the election, with more than 70 territories choosing their political leaders, including key nations like the US, UK, India and Japan. This introduced a layer of unpredictability to the M&A landscape, with deal-making tempered by caution around uncertain outcomes”, explains Harsh Maheshwari, Global Advisory Services Leader for Baker Tilly International.  

However, a reduction in interest rates across many markets due to lower inflation offered a much-needed boost to the M&A market in the second half of 2024. As election-related uncertainties recede, we anticipate a surge in M&A activity this year — particularly if geopolitical sentiment continues to improve.  

“Dealmakers are focusing on rebalancing their portfolios, while corporations are adjusting their value chains to align with shifting trade dynamics and geopolitical developments. Private equity (PE) firms face mounting pressure to deliver returns to investors, which is expected to result in greater activity through portfolio company divestitures and revised strategies. Additionally, the growing momentum around artificial intelligence (AI) is likely to spark increased investment in assets linked to this transformative technology”, says Mr Maheshwari.  

As companies and investors seek clarity on the strength of an M&A rebound in the year ahead, here’s what our global team expects to see in 2025.

Consolidation and rise of mid-market deals 

2024 was dominated by a shortage of high-quality M&A targets, leaving companies with a record cash pile, explains William Chapman, Principal at Baker Tilly in the US. 

'Investment is expected to centre on core revenue-generating functions that strengthen competitive advantage, while the divestment of non-core assets – a trend that gained considerable momentum during 2024 – looks set to continue.” 

Mid-market M&A activity in particular is poised for growth, driven by increased margin pressure, the push for scale and the focus on inorganic growth to accelerate digital transformation. 

“There remains a substantial amount of dry powder in the hands of PE and debt funds”, says Mr Chapman.  

“And the pressure to deploy that capital is high. With investment timelines and mandates driving activity, these funds are actively seeking opportunities to put their resources to work, fuelling continued momentum in the M&A market."  

Economic stabilisation 

A more optimistic economic outlook and improved market sentiment across many regions are expected to give buyers greater predictability in planning their financing, and create a solid foundation for heightened deal activity, explains Xavier Mercadé, CEO of Baker Tilly in Spain.  

“This is particularly crucial for mid-sized companies, which tend to rely more heavily on borrowing. 

“However, regional variations remain. While ongoing geopolitical uncertainty in the Middle East and Ukraine continues to weigh on business confidence, and European economies face stagnation, the incoming Trump administration in the US is likely to provide a short- to medium-term boost to M&A activity there. This uplift could spark a ripple effect, benefiting other major economies and reinforcing pockets of growth amid broader challenges.” 

Regulatory evolution  

Regulatory risk continues to be the most significant hurdle in M&A deal execution, says Bernhard Rehbein, M&A lawyer in Baker Tilly in Germany, and co-head of the network’s legal corporate/M&A practice group – with the growing complexity and unpredictability of securing regulatory approvals posing challenges.  

“The promise of regulatory moderation by leaders in major economies such as the US, UK, Japan and India could ease these barriers, paving the way for more favourable deal outcomes. This will create new M&A opportunities, which we expect CEOs and PE leaders to act on to position their organisations for future growth.”  

The pursuit of customers and markets to fuel M&A 

Gaining access to new customers and markets remains a primary motivator for M&A activity, as businesses focus on diversifying their revenue streams and boosting growth, notes Olivier Willems, CEO of Baker Tilly in Belgium. 

“Additionally, the expansion of supply chains and distribution networks is a key priority, enabling companies to strengthen their operational capabilities and improve market reach. These drivers underscore the focus on scaling operations and tapping into new avenues for competitive advantage. 

“Acquiring advanced technology and intellectual property is another key focus, highlighting the growing role of innovation in maintaining a competitive edge.”  

AI will make its presence felt 

Generative AI has driven a notable surge in valuations across the entire AI value chain, fuelling an intensifying race for AI leadership, explains Andrew Feeke, partner at MHA in the UK.  

“Technology companies are racing to launch groundbreaking applications, infrastructure providers are expanding capacity to meet the demands of AI-powered models, and businesses across industries are leveraging AI to boost productivity and extract greater value from their data.  

“Looking ahead to 2025, AI's influence on M&A activity is expected to extend well beyond the tech sector, reshaping dealmaking across a wide array of industries.”