Take a look at the top M&A trends to watch in 2025, from digital transformation and ESG to private equity’s growing role and big shifts across key industries
Mergers and acquisitions are surging again.
Photo by Jeremy Bezanger
Corporate consolidation, the process where companies merge or acquire other companies (M&A), is a constant force reshaping industries and the broader economy. After a period of relative calm influenced by economic uncertainties and geopolitical tensions, the M&A landscape appears poised for a resurgence in 2025. Understanding the driving forces and emerging trends in this dynamic environment is crucial for business leaders, investors, and policymakers alike. Here are some key trends in corporate consolidation worth watching.
The Evolving M&A Landscape: Poised for Rebound?
As trends for mergers and acquisitions showed, global M&A activity in 2024 showed signs of recovery, with deal value increasing compared to the lows of 2023, although overall volume remained somewhat subdued, particularly in smaller and mid-sized deals.
However, many analysts predicted a more robust rebound in 2025. Factors contributing to this optimism include stabilizing (and in some regions, falling) interest rates, easing credit conditions, greater CEO confidence, and a potential shift towards a more favorable regulatory environment in some jurisdictions. Then the chaos triggered by a looming trade war hit and all bets were off.
Technology and Digital Transformation as Key Drivers
The relentless pace of technological change, particularly the rise of Artificial Intelligence (AI), is a significant catalyst for M&A. Companies are increasingly looking to acquire technology, talent, and capabilities through M&A to accelerate their digital transformation, enhance competitiveness, and integrate AI into their operations. This is evident across various sectors, with technology deals representing a large share of M&A activity. Acquiring AI capabilities directly can be challenging, leading some companies to explore partnerships or minority stakes as alternative strategies.
The Growing Influence of ESG
Environmental, Social, and Governance (ESG) factors are no longer peripheral concerns in M&A; they are increasingly integral to deal strategy, due diligence, and valuation. Stakeholders, including investors and consumers, are demanding greater transparency and accountability regarding sustainability, diversity, and ethical practices. Companies with strong ESG performance may command premium valuations, while neglecting ESG factors can expose acquirers to regulatory penalties, reputational damage, and long-term risks. ESG due diligence is becoming standard practice, helping buyers assess both risks and opportunities related to a target’s sustainability profile. While awareness is high, integrating ESG effectively into the M&A process, including defining clear metrics, remains an evolving practice for many dealmakers.
Strategic Deals and Mid-Market Momentum
While 2024 saw an uptick in megadeals (those valued over $1 billion or even $5 billion), driven partly by corporate acquirers using highly valued stock as currency, the trend towards smaller, strategic “bolt-on” or “tuck-in” acquisitions is also notable. Companies are focusing on acquiring specific capabilities or market share to enhance their core business rather than pursuing purely opportunistic or transformational mega-mergers.
Navigating Regulatory Headwinds
Increased regulatory scrutiny, particularly concerning antitrust and competition, posed significant challenges for dealmakers in recent years. Authorities globally have shown a greater willingness to investigate and block deals, especially large ones or those involving dominant tech players or “killer acquisitions” (where large firms buy innovative startups to eliminate potential competition). While some anticipate a potentially more relaxed stance in certain jurisdictions like the US following recent political changes, regulatory hurdles, including foreign investment reviews (like CFIUS in the US), are expected to remain a key consideration, potentially lengthening deal timelines.
Private Equity’s Continued Prominence
Private Equity (PE) firms remain a dominant force in the M&A landscape. After a period of slower exit activity, PE firms are under increasing pressure from their investors (Limited Partners) to sell portfolio companies, many of which have been held longer than usual. Combined with record levels of “dry powder” (uninvested capital estimated at over $2 trillion globally), this pressure is expected to fuel both PE-led acquisitions and exits in 2025. PE firms are evolving from mere financial sponsors to active partners driving operational improvements and strategic growth, often employing “buy-and-build” strategies to consolidate fragmented industries, particularly in the middle market. Their activity is significant across various sectors, including technology, healthcare, industrials, and wealth management.
Sector-Specific Spotlights
Consolidation trends vary by industry. Technology, healthcare/pharma, and energy have been particularly active M&A sectors. Energy M&A saw significant activity, driven by the pursuit of scale and potentially lighter regulation. Healthcare may see a comeback in larger deals as pharmaceutical companies seek growth through acquisition. Industrials, financial services (including wealth management), and even chemicals are also seeing consolidation pressures driven by factors like margin pressure, digital transformation, and the need for scale.
The corporate consolidation landscape heading into the remainder of 2025 looks volatile. Strategic imperatives like digital transformation and achieving scale, coupled with significant PE dry powder and pressure to exit investments, are powerful tailwinds. However, navigating economic uncertainties, geopolitical risks, evolving regulatory environments, and integrating ESG considerations will require careful planning and execution. Companies that proactively adapt their M&A strategies to these trends will be best positioned to leverage consolidation for growth and value creation in the coming year.
This content is a joint venture between our publication and our partner. We do not endorse any product or service mentioned in the article.
