Global M&A market poised for a comeback in 2025, finds report

After three years of sluggish mergers and acquisitions (M&A) activity, the market is showing signs of resurgence in 2025, according to the latest Global M&A Report released today by Bain & Company.

The consultancy firm predicts that easing interest rates and a shift in regulatory challenges will help pave the way for a significant recovery in M&A deals this year. The report underscores that M&A and divestitures will play a crucial role in helping companies adapt to rapid technological disruption and a post-globalisation economy.

With economic uncertainty still prevalent, businesses are under pressure to find new avenues for growth, and M&A is expected to be a vital strategy. “M&A activity tends to be cyclical, and we believe the market is poised for an upturn,” said Les Baird, partner at Bain & Company and head of the firm’s global M&A and Divestitures practice.

“While we saw a modest recovery last year, deal value remains historically low as a per cent of global GDP, as headwinds have stifled dealmaking for the past three years. But as these headwinds become less acute, more companies will be poised to join those who have successfully adapted.”

Forces behind the M&A upswing

The demand for deals remains robust, even though activity has been subdued for a period.

M&A remains a cornerstone of business strategy, especially for companies looking to expand, consolidate, or realign their operations in response to uncertain economic outlooks, shifting supply chains, and ongoing geopolitical tensions.

Financial sponsors, including private equity firms, are also eager to deploy capital as the market starts to stabilise.

Bain’s report highlights a growing pipeline of assets ready for sale, with a range of players — from corporations reevaluating strategies to private equity and venture capital firms seeking liquidity — positioning themselves for a market rebound.

The report also notes that governments and regulatory changes in the EU and US are expected to provide a more conducive environment for M&A deals in 2025.

Looking ahead, technology disruption is expected to be the primary driver of M&A activity in the coming years. “Generative AI, automation, renewable energy, and quantum computing are just a few of the technologies that will shape the next wave of strategic M&A,” Bain’s report states.

As companies across various sectors strive to stay competitive, both tech and non-tech companies will continue to seek tech acquisitions to bolster their offerings and operational efficiency.

Generative AI: A game-changer for M&A

Bain’s research shows a growing trend in the use of generative AI to streamline and enhance the M&A process. The firm’s survey of over 300 M&A professionals revealed that 21 per cent are already using generative AI to support dealmaking — an increase from 16 per cent in the previous year. By the end of 2025, one-third of M&A professionals are expected to incorporate AI into their processes.

“We expect that generative AI will fundamentally change every stage of the M&A process over the next five years,” said Baird. “From sourcing and screening deals to conducting due diligence, AI tools will accelerate traditional processes and reduce timelines for critical activities such as integration and divestiture planning.”

Bain anticipates that, in the near future, early adopters will use AI to draft integration work plans and transition service agreements in less than 20 per cent of the time it previously took, revolutionising how M&A transactions are executed and integrated.

Middle East: A strategic player in M&A

The Middle East has seen an impressive surge in M&A activity in 2024, with deal values reaching $29bn — a 52 per cent increase from the previous year. Sovereign wealth funds, alongside government-related entities in the UAE and Saudi Arabia, continue to dominate the region’s M&A landscape. In fact, energy and natural resources remain critical sectors, accounting for nearly 80 per cent of deal value in the region.

Notable transactions include Saudi Arabian Oil Co’s $8.9bn acquisition of Rabigh Refining & Petrochemical, as well as significant investments in advanced manufacturing and technology. “The year 2024 has proven to be a transformative one for the region’s M&A activity,” said Gregory Garnier, partner at Bain & Company and head of the firm’s Private Equity and Sovereign Wealth Fund practice in the Middle East.

“With continued support from government entities and strong cross-regional investments, particularly in Europe, the Middle East is well-positioned to continue driving high-value strategic acquisitions,” he added.

Middle Eastern investors are increasingly turning their focus to Europe, with a 120 per cent increase in deal value for European targets in 2024.

Meanwhile, investments in the Asia-Pacific region have plummeted by 78 per cent, signaling a strategic shift in the region’s approach to international acquisitions.

Sector-specific insights

Bain & Company’s report also delves into sector-specific trends shaping M&A activity globally:

• Consumer products: While large acquisitions in the sector were few, the value of consumer products M&A fell by 19 per cent in 2024. Many executives in this space are focusing on divesting low-growth assets. Bain’s survey shows that 60 per cent of consumer product leaders expect to sell assets in the next three years.
• Energy and natural resources: The energy sector saw a record $400bn in deal activity in 2024, led by oil and gas consolidation and portfolio reshaping in chemicals. Companies are achieving greater synergies from their deals, and more quickly, compared to previous years.
• Financial services: The financial services sector also witnessed robust dealmaking, with total value in the market reaching $309bn in 2024. Banks are acquiring for scale, while insurers are narrowing their focus to core businesses, particularly in the growing areas of fraud prevention and identity verification.
• Media and entertainment: Traditional media companies are consolidating in the face of competition from big tech, leading to an increase in M&A across various sectors. In 2024, more than half of media and entertainment deals involved targets or acquirers outside of the industry.
• Retail: After regulatory hurdles, the retail industry saw a rebound in both M&A volume and value in 2024, with major players eyeing continued expansion in 2025. Bain’s survey found that 75 per cent of retail executives plan to maintain or increase the pace of dealmaking in the coming year.

As global economic uncertainty persists, M&A activity is expected to rebound in 2025, driven by a confluence of factors including the easing of regulatory and financial pressures, a growing appetite for technology-driven acquisitions, and the strategic realignment of companies in response to evolving global trends.

For investors and businesses alike, M&A will be a vital tool in navigating the rapidly shifting market landscape.

With the Middle East continuing to play a pivotal role, particularly in energy and technology sectors, 2025 is shaping up to be a year of significant dealmaking activity.