Key Drivers of M&A in 2025, Including Private Equity’s Role

Mergers and acquisitions (M&A) is poised for significant growth and transformation in 2025. Several drivers could shape M&A activity, reflecting a blend of strategic ambitions, regulatory shifts, and technological advancements. Explore key M&A considerations for 2025.

Strategic growth and capability enhancement

One of the foremost drivers of M&A in 2025 is pursuing strategic growth and new capabilities. By focusing on refreshing their portfolios through acquisitions enhancing strategic positioning and operational capabilities, we believe private equity (PE) could be well positioned to create value and realize value through selling portfolio companies.

Regulatory and monetary policy normalization

The normalization of regulatory and monetary policies is providing a much-needed boost to CEO confidence. With key bottlenecks such as regulatory uncertainty and hawkish monetary policies being addressed, large-scale transactions are expected to increase. This newfound clarity is encouraging PE to engage in more ambitious M&A activities, leveraging favorable conditions to drive growth and transformation.

Private equity activity and liquidity strategies

Sponsors are playing a crucial role in the M&A landscape, leveraging various strategies to unlock liquidity. These include minority stake sales, continuation funds, and other creative deal structures. The outlook for sponsor exits is positive, with a focus on generating liquidity through sales or initial public offerings. This activity is driven by high levels of dry powder and a continued emphasis on returning capital to investors.

Technological advancements and AI

Rapid technology advancement — particularly in artificial intelligence (AI) — is a major driver of M&A activity. Companies are investing heavily in AI, leading to increased M&A in technology sectors. The focus is on acquiring infrastructure and platform capabilities to support the development and deployment of AI technologies. This trend is expected to continue as AI becomes increasingly integral to business operations and competitive strategy.

Regional insights and cross-border M&A

M&A activity is accelerating globally, with significant contributions from various regions. In Europe, corporate governance reforms and favorable regulatory environments are driving growth. In the Asia-Pacific region, countries like Japan and India are emerging as hot spots for cross-border transactions, supported by supportive regulatory and government policies. North America continues to dominate M&A activity, with a focus on strategic acquisitions and portfolio simplifications.

Sector-specific M&A trends

Different sectors are experiencing varying levels of M&A activity. Technology is seeing high levels of activity driven by AI and digital transformation. Health care continues to focus on capability-enhancing acquisitions, while financial services is experiencing increased M&A activity as regulatory concerns diminish. These sector-specific trends are shaping the overall M&A landscape, with each industry leveraging M&A to achieve strategic objectives.

How CLA can help with M&A considerations

M&A in 2025 is characterized by a convergence of favorable macroeconomic conditions, regulatory clarity, and a growing risk appetite among corporates. As companies navigate M&A, the ability to capitalize on strategic opportunities will be critical to driving growth and transformation.

Considering a merger or acquisition? CLA can help negotiate better terms and improve value for businesses, emerging companies, and international entities, as well as venture capital, private equity, and hedge fund firms.