The 2025 M&A landscape is evolving amidst a backdrop of increased global deal volumes and strategic corporate maneuvers. Despite M&A activity being at a 20-year low relative to global market capitalization, a 15% year-over-year increase indicates a rebound driven primarily by corporate buyers. Key trends include significant AI investments, cross-border M&A momentum, and innovative deal structuring, all of which are reshaping how organizations approach mergers and acquisitions.
Find below the top 10 points from the Goldman Sachs 2025 M&A Outlook.
1. Global M&A Momentum
- M&A volumes rose by 15% year-over-year but are still at a 20-year low relative to market capitalization. With corporate buyers accounting for 71% of deals through Q3 2024, driven by strong balance sheets and pent-up demand, we may see a further uptick in M&A activity in 2025.
2. AI Revolution and M&A
- U.S. hyperscalers have invested $200 billion in AI, with projections reaching $1 trillion by 2026. This investment is spurring M&A across infrastructure, platforms, and applications, suggesting ongoing sector growth. The low 5% data center vacancy underscores the need for expanded infrastructure, positioning AI as a key driver of deals in 2025.
3. Corporate Simplification Trends
- In 2024, 40% of spin-offs are expected from large-cap firms ($25B+), indicating a focus on optimizing portfolios. This trend could result in more agile companies by 2025, better equipped to capitalize on core strengths and respond to market dynamics.
4. Rebound in Sponsor Activity
- Anticipated exits of over 1,200 portfolio companies (valued at $1B+) via sales or IPOs in the next 2-3 years highlight a robust private equity market. Sponsor-to-sponsor deal volumes increased by 54% year-over-year, suggesting sustained activity into 2025.
5. Surge in Cross-Border M&A
- Cross Cross-border M&A regained momentum in 2024, with APAC generating $150 billion in September alone. Strong activity in EMEA and U.S.-Europe deals (44% of cross-regional activity) indicates globalization trends that are likely to continue in 2025.
6. Regulatory and Monetary Clarity
- While large U.S. deals ($10B+) now take nearly twice as long to close, anticipated favorable regulatory policies could streamline the process. Rising CEO confidence may further enhance the M&A environment by 2025.
7. AI's Impact on Software
- Generative AI could automate 25% of work tasks, with AI platform revenue expected to grow over 50% annually. This automation potential will likely drive companies to pursue M&A for AI capabilities, reshaping operational efficiencies by 2025.
8. Shifting Sector Focus
- Non-tech firms' acquisition of tech companies has increased to 12% of M&A volumes, up from a 7% historical average. This shift highlights a broader trend towards tech integration, with growth sectors like healthcare and technology leading M&A activity, a trend expected to persist in 2025.
9. Innovative Deal Structuring
- The use of earnout provisions - a financial mechanism that involves contingent payments to the seller, based on the future performance of the acquired business - and equity rollovers is aligning deal outcomes with corporate goals, enhancing execution efficiency. Such structures could become increasingly common in complex deals by 2025.
10. Evolving Activism Landscape
- Activist campaigns targeting larger corporations, with 33% aimed at $10B+ companies, suggest an increasing push for strategic simplifications. Simplification-focused activism, making up 40% of demands since 2022, is expected to influence corporate strategies and governance into 2025.
