2025 MHA Global Transaction Report
A review of global transactional activity and a forecast into what this year may look like from merger and acquisition specialists from across the Baker Tilly International network.
Foreword by Andrew Feeke
The global transactions market last year was defined by ongoing uncertainty. Geopolitical unrest and sluggish economic growth weighed heavily on M&A activity levels.
However, a reduction in interest rates across many markets as a result of lower inflation offered a much-needed boost in the second half of 2024.
While transaction volumes in the past 12 months remained below the buoyant levels of recent years, there are signs of cautious optimism in many parts of the world as we move forward. Our analysis provides an overview by region, recognising that market dynamics can vary significantly from one area to the next.
This report draws on insights from Baker Tilly International’s member firm Corporate Finance network, providing truly global analysis and predictions on what 2025 might hold for mid-market deal activity.
Global M&A activity
Cautious optimism for 2025
The outlook for global M&A activity over the next 12 months is one of cautious optimism, with expectations of a moderate increase in dealmaking activity building on a more active market in 2024. According to data provider Dealogic, global M&A volumes have already reached $3.2 trillion during the first 11 months of 2024, up from $2.76 trillion over the same period last year. This reflects confidence in economic growth in certain markets, heightened corporate appetite for strategic growth, and robust capital reserves of both corporate and Private Equity (PE) buyers.
While ongoing global geo-political uncertainty across the Middle East and Ukraine will continue to dampen business confidence and European economies remain stagnant, the Trump administration is expected to provide a short to medium-term boost to M&A activity in the US – with a ripple effect across other major economies. Furthermore, M&A is seen as a critical driver of transformation for businesses seeking to adapt and grow – both domestically and globally.
However, given the nature of global M&A, individual country market outlooks can differ and some are widely different. This divergence is driven by the unique economic and geopolitical challenges they face, as evidenced in the insights below.
Our global specialists' predictions
"Global M&A activity will be driven by renewed momentum in market and executive confidence. The corporate leaders I speak with show remarkable optimism, which has already fed through to a surge of M&A deals towards the end of 2024. Our clients are telling us that substantial capital is ready to be deployed from companies and private investors. With interest rates expected to fall further and inflation concerns easing, the stage looks set for an active year of deal-making across all major regions including Africa."
"While M&A activity in India is likely to be more aggressive than most, global uncertainty in Ukraine and Middle East, coupled with a new administration in the US, will lead to a more cautious approach to M&A – particularly cross border activity."
"I believe the recovery in international M&A over the past couple of years will continue into 2025, with motivated sellers and active buyers, which have now factored in the economic and political environment, and new valuation metrics into their dealmaking."
What our global experts predict will happen to the level of M&A activity globally in the next 12 months
Domestic M&A activity: Mixed expectations
Domestic M&A activity presents a more varied outlook. Overall moderate growth is anticipated, driven by local consolidation opportunities and strategic acquisitions aimed at strengthening market share.
However, some parts of the world are likely to face continued economic headwinds and regulatory constraints, which could well temper activity. This duality reflects the influence of localised factors shaping domestic dealmaking trends.
Our global specialists' predictions
"2024 was a year of mixed performance for UK domestic M&A. A slow start was followed by a wave of optimism in spring and summer, only to be dampened by the Chancellor’s Budget in October, which also prompted an artificial acceleration of transactions in the lead-up to the fiscal event. Looking ahead to 2025, cautious optimism persists, underpinned by market resilience despite economic headwinds. SME-focused transactions, particularly in niche markets with regional strength, may offer untapped potential. Additionally, certain consumer markets, including e-commerce, health and wellness, and sustainable goods, are expected to show resilience and could drive M&A activity in the coming year."
"The level of activity in the US is increasing with sell-side due diligence engagements as well as sell side investment banking engagements."
"Given the political uncertainty in France, some of our clients are opting to postpone the sale of their assets. In addition, sectors such as industry and real estate, are facing challenges from interest rates."
Prediction of level of investment for domestic M&A in the next 12 months
Intensifying competition for M&A assets
The competition for M&A assets globally is expected to intensify in the year ahead. PE firms and other investment funds are emerging as dominant players, leveraging abundant capital reserves for the right strategic assets.
According to Reuters, the PE industry has approximately $4 trillion of capital that is yet to be deployed and dealmakers predict a surge in buyout volumes next year. Corporate buyers within the same industries will also remain active, while some competition may arise from buyers exploring cross-sector opportunities. The increasing competition underscores the need for agility and decisive action when identifying and securing these assets.
Andrew Feeke, Head of MHA Corporate Finance in the UK adds: “Debt funders remain active, with high-street lenders increasingly eager to expand their portfolios, particularly in the mid-market and large corporate segments. The expectation of stable interest rates is alleviating some of the risks associated with funding for growth or M&A, as the new cost of capital becomes an accepted part of transaction dynamics. Beyond traditional funders, alternative capital providers such as credit funds, family offices, and crowdfunding platforms are emerging as key players, offering tailored financing solutions. However, increased regulatory scrutiny in sectors like tech and healthcare may introduce additional diligence requirements, adding complexity to deal execution.”
of our Baker Tilly specialists expect to see clients facing increasing competition for assets in the next 12 months.
Key buyside drivers of M&A activity
Access to new customers and markets continues to be the most significant driver of M&A activity, as companies aim to diversify revenue streams and accelerate growth. Acquiring new technology and intellectual property is also a critical priority, reflecting the rising importance of innovation as a key tenet of competitive strategy. Additionally, the pursuit of top talent, supply chain expansion, and distribution network enhancement are shaping dealmaking strategies.
The greatest buy side drivers of M&A activity expected over the next 12 months
Access to new customers and markets
Acquisition of new technology or IP
Expansion of supply chain and distribution
Response to trade barriers and tariffs
Our global specialists' predictions
"Buyside activity is being driven by the strategic pursuit of access to new customers and markets, as businesses seek to diversify their revenue streams and enhance growth opportunities. 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."
"Tariffs and trade barriers are prompting companies to rethink their strategies, driving M&A activity as a way to access new customers, enter untapped markets, and acquire cutting-edge technology or intellectual property. By leveraging acquisitions, businesses can bypass obstacles, diversify their revenue streams, and stay competitive in an increasingly globalised and complex market."
"Technology is increasingly driving the M&A process, with advanced analytics, AI, and data visualisation tools transforming due diligence. Sustainability continues to be a significant factor, with companies that align with global ESG trends commanding premium valuations. We also see renewed interest in buy-and-build strategies, particularly in fragmented industries where consolidation can unlock synergies and market share gains. To thrive in 2025’s dynamic landscape, as advisors we must remain agile, innovative, and committed to delivering tailored solutions for our clients."
Key sectors for M&A in 2025
The technology, software, and media sectors are among those expected to lead M&A activity in 2025, driven by the continued demand for digital transformation, innovation, and automation across industries. Companies in these sectors are prioritising the acquisition of cutting-edge technologies and intellectual property to stay competitive in an increasingly tech-driven marketplace.
AI presents a compelling opportunity for tech acquisitions, offering businesses – without the resources or expertise to develop their own capabilities – to enhance their tech offering and scale operations rapidly. Gartner predicts this trend will drive a surge in AI acquisitions.
of global respondents say that they're either using AI-enabled tools or plan to do so in the next two years.
Life sciences and healthcare are also poised for significant M&A activity. The ongoing global focus on healthcare innovation, coupled with the aging population in many regions, is pushing companies to invest in research, development, and expanded access to care – a view echoed by Jefferies’ annual healthcare survey, with 72% of respondents expecting healthcare M&A activity to be higher in 2025.
Additionally, the energy, natural resources, and industrial sectors are seeing a resurgence in deal interest, with sustainability initiatives and the shift toward renewable energy driving investments in new technologies and infrastructure.
Last year marked a resurgence in M&A activity across traditional sectors, with Industrials and manufacturing attracting significant interest, as evidenced by Baker Tilly members advising on 396 transactions alone. Business services also demonstrated robust growth, thanks to strong operating models and recurring revenue streams. Already in 2025, our teams are continuing to support a diverse range of clients across multiple sectors. TMT remains the standout sector in terms of valuations, while healthcare has stalled somewhat, awaiting clearer direction from the Labour government.
UK Industrials, particularly in energy transition and advanced manufacturing, are maintaining strong momentum. The energy transition is driving M&A in renewables, energy storage, and electric vehicle infrastructure, supported by government incentives and decarbonisation goals.
Life science and healthcare will be an important sector driving transaction activity in 2025, driven by the need to serve the world’s ageing population. This sector also makes up a large percentage of the US economy, so is likely to contribute a significant level of M&A activity across the country.
We are also seeing large funds being formed for infrastructure projects due to the aging grid, roads, rail and bridges, and with the new administration energy independence will become a key mandate in the US.
Which of the following sectors do you think will be the most attractive over the next 12 months?
Cross border M&A
Trends, outlook, target destinations
Cross border M&A continues to be a key focus and also a challenge for businesses navigating an increasingly complex global environment shaped by geopolitical tensions and macroeconomic challenges. Despite these pressures, the appetite for cross border transactions remains strong, reflecting the resilience of global markets and the sustained appeal of international growth opportunities.
Cross border M&A is a critical business strategy for several reasons, as it enables companies to achieve growth, diversify risks, and enhance competitiveness in an increasingly globalised economy.
Outlook
The outlook for cross border M&A activity over the next 12 months is cautiously optimistic from our corporate finance experts globally. Market sentiment points to a likely increase in cross border investment, with expectations of moderate growth in many jurisdictions. Underpinning this optimism, are the expectations widely reported in the media that the Trump administration could spark a near-term boost in dealmaking, particularly through inbound interest in high-growth U.S. companies.
Our global specialists' predictions
"German strategic investors are avoiding domestic investments and instead are channelling their resources toward international opportunities, driven by the pursuit of diversification and growth. Factors such as stagnant domestic growth, regulatory pressures, and geopolitical challenges within Europe have made foreign markets more attractive."
"In Singapore, the pool of attractive acquisition targets remains limited, largely due to the country's relatively small market size and the maturity of many sectors. As a result, many Singapore-based companies and investors are shifting their focus to neighbouring countries, where acquisition opportunities are more abundant and growth prospects are significantly higher."
"The outlook for 2025 is filled with opportunities, but success will require a proactive and innovative approach. At MHA Corporate Finance, we are doubling down on collaboration with our cross border colleagues across Baker Tilly International to leverage the full strength of our global network."
Are cross border deals a risk worth taking given the current geopolitical environment and various macro challenges?
"At MHA, we are globally united within the Baker Tilly International network, and our connected approach enables us to advise our clients on cross border transactions, delivering the expertise our clients need, when and where they need it."
Challenges and risks
According to many of the clients we work with, political stability tops the list of concerns when considering cross border M&A, followed by cultural and talent integration, securing supply chains, and navigating complex regulatory and tax environments. Many of these also concur with a report in the Global Treasurer on the growing complexities of cross border transactions.
These factors highlight the importance of robust due diligence and strategic planning to mitigate risks and ensure successful integration in cross border deals.
Companies have long been wary of the risks posed by political instability, unpredictable tax changes, or regulatory hurdles that could affect the ease of doing business or disrupt the market dynamics. However, in recent years, the focus of concern has shifted somewhat as global businesses grapple with new challenges: long, complex, and potentially volatile supply chains.
Regional focus and opportunities
Both Europe and North America offer distinct advantages that cater to the strategic goals of acquirers, whether it’s gaining access to new markets, acquiring cutting-edge technologies, or diversifying geographic risk. As businesses continue to navigate a complex global landscape, these regions will likely remain a large focus for many looking to cross border M&A for expansion, providing the stability and innovation needed to drive long-term growth.
Europe
When considering where clients are likely to pursue cross border opportunities, Europe emerges as the leading destination. This aligns with recent data from Mergermarket, which shows EMEA deal volume reaching €420 billion across nearly 7,000 transactions in the first half of 2024—a 38% increase from the historically low levels of 2023.
Drilling down to a country level, the UK – one of the traditionally more active markets in Europe – value of inward M&A in Quarter 3 2024 was £7.8 billion, £1.1 billion higher than the previous quarter (£6.7 billion) and higher than over the same period in 2023, when it reached £5.4 billion, according to ONS data.
This rebound demonstrates the resilience of the region despite lingering geopolitical uncertainties. Europe’s relative political stability, diverse economic landscape, strong industrial base, and robust consumer markets make it a compelling region for M&A activity.
The de-industrialisation in Germany due to high energy costs, a lack of qualified workers, high wage costs and overregulation is leading to a flight of German strategic investors abroad. From a German perspective, cross border transactions will therefore increase, while domestic transactions will remain at a low level.
Currency fluctuations, particularly the weaker British pound, may attract international buyers seeking value in UK assets, especially in real estate, consumer goods, and technology. Nearshoring trends are also reshaping cross border activity, with companies focusing on acquisitions closer to home to mitigate supply chain risks. In this interconnected environment, cultural integration will be a key determinant of success, underscoring the need for robust post-transaction strategies.
Current challenges/risks of greatest concern for clients’ cross border M&A strategies
North America
The U.S. continues to be a highly active market for M&A, driven by strong economic fundamentals, sectoral leadership, and abundant PE capital. Key industries such as technology, healthcare, and financial services remain attractive for dealmakers, with significant interest in emerging areas like artificial intelligence and cybersecurity. The U.S. also benefits from its large and affluent consumer base, which serves as a springboard for growth for companies seeking to expand their footprint.
Political and policy factors further enhance the U.S.’ appeal for cross border M&A, with the Trump administration already providing a boost to deal-making, as reported in the Financial Times. Additionally, the transparent regulatory framework in the U.S. facilitates international investments despite its rigorous antitrust scrutiny. This combination of economic strength, sectoral opportunities, and regulatory transparency ensures the U.S. remains a focal point for M&A activity globally.
Cross border M&A will continue to demand careful navigation of risks and challenges, but the pursuit of international growth, access to strategic assets and new market opportunities, ensure it remains a critical component of many businesses’ strategies heading into 2025.
Key drivers to cross border M&A
- Access to new markets: Enter new geographic markets, tapping into previously inaccessible customer bases. For instance, companies acquiring entities in emerging markets can benefit from high-growth opportunities and expanding middle-class demographics.
- Regulatory and trade advantages: Bypass trade barriers or tariffs, making this strategy particularly appealing in the face of rising global protectionism.
- Access to cutting-edge technologies and intellectual property that may not be available domestically. For example, technology and AI acquisitions are increasingly prevalent, as businesses aim to remain competitive in a rapidly evolving digital landscape.
- Achieve cost synergies, optimise supply chains, and streamline operations. This can lead to enhanced profitability and operational resilience, especially in industries like manufacturing and energy.
- Economic risk mitigation: Diversify revenue streams across multiple economies, reducing dependence on a single market. This is particularly valuable during economic downturns or political instability in a company’s domestic market.
- Sectoral diversification: Achieve diversification by expanding into complementary or high-growth sectors in other regions.
- Access to skilled talent, advanced production facilities, and unique cultural insights, which can be leveraged for competitive advantage.
- Achieving global scale and solidifying market positions against international competitors. It can leads to enhanced brand recognition and positioning as a global player.
Drivers and impacts on global M&A valuations
Valuations remain a critical aspect of global M&A activity, with agreement on pricing often being the greatest challenge acquirers face in closing deals. Over the past 12 months, buyers and sellers have found themselves negotiating in a landscape shaped by fluctuating economic cycles, geopolitical uncertainty, inflationary pressures, and rising interest rates. These factors are driving valuation trends and influencing deal structures, making them a pivotal consideration for all stakeholders.
Corporates and PE-firms have initiated multi-billion pound acquisitions targeting London-listed companies. This trend reflects a strategic move by buyers seeking to capitalise on what they perceive as undervalued UK assets, enabling them to secure larger deals amidst the current market conditions.
Valuation expectations also vary by sector. Research from Citizens Bank indicates that 54% of executives in the Industrials sector anticipate higher valuations in 2025, compared to only 26% of executives in the Real Estate, Gaming, and Lodging Industries who share this outlook. This disparity highlights the varying market dynamics and growth prospects influencing sector-specific valuation trends.
Looking ahead to the next 12 months, market sentiment suggests a period of relative stability in valuation trends, with fewer predicting significant upward or downward shifts. However, the interplay of several factors, including the cost of capital, liquidity, and deal activity levels, will continue to shape the valuation landscape.
Andrew Feeke, Head of MHA Corporate Finance in the UK adds: “ESG credentials, digital capabilities, and intellectual property are becoming critical differentiators in driving higher valuations, as buyers prioritise future-proof investments. We also anticipate a rise in distressed M&A, where undervalued assets may be acquired at attractive prices amid economic uncertainty.”
Key factors influencing valuations
Economic cycles have historically been one of the most significant influences on M&A valuations.
According to Andreas Frohlich, Baker Tilly Germany:
“Reduced deal activity in 2023 and 2024 as a result of weaker economic growth lowered competition for targets and contributed to decreased valuations. Added to this, higher financing costs as a result of interest rates have made some acquisitions unprofitable, further dampening deal activity."
The rising cost of capital has had a dual impact: it has lowered valuations by reducing buyer purchasing power, while prompting more creative deal structures.
Antoine Duval, Baker Tilly France says:
"The rising cost of capital, increased availability of acquisition opportunities across various markets, and prevailing uncertainty are expected to drive down valuations. These factors are also likely to encourage buyers to adopt alternative deal structures, such as reducing upfront payments and incorporating larger earn-out components."
Geopolitical risks have heightened investor caution, leading to more conservative valuations. Simultaneously, inflation continues to squeeze margins, reducing the profitability of potential targets.
Michael Sonego, Pitcher Partners (the Australian member firm of Baker Tilly International) underscores the impact these factors are having on sentiment:
“Sentiment is one of the biggest drivers of deal activity and in turn valuations. The economic environment with high inflation and interest rates, combined with governments increasing taxes to re-coup Covid stimulus, has had a significant negative impact on sentiment, and therefore valuations.”
Despite headwinds, significant liquidity within PE and investment funds has exerted a positive influence on valuations.
Andrew Feeke, Head of MHA Corporate Finance in the UK, comments on PE’s influential role in M&A and the impact this may have on valuations: “PE continues to play a pivotal role in the M&A landscape, but identifying high-quality growth assets remains a challenge. Highly desirable assets are likely to command premium valuations through competitive auction processes, often leveraging a dual-track strategy involving both PE and trade buyers. With limited supply of such assets, PE players are increasingly backing seasoned executives or management teams to replicate previous successes in new ventures.
Meanwhile, Nicolas Pierre-Baume, Blue Partners Finance, France, reports that funds raised over the past three years are now under pressure to be deployed: “Investment funds have raised significant liquidity over the past three years, and some are facing deployment challenges. This has a positive impact on valuations. Nevertheless some of strategic buyers have halted their external growth strategies, creating competition for desirable targets and supporting valuation levels.”
William A. Chapman of Baker Tilly US agrees: “If deal activity increases significantly, we could see a significant impact on supply and demand of assets in the market. This could become particularly acute if PE and debt funds come under pressure from their LPs to deploy capital.”
However, Nitin Arora, Baker Tilly India, adds: "In India, the stock market boom, coupled with the surge in SME IPOs, has created a situation where excess liquidity is chasing a limited pool of quality companies. This dynamic has driven up seller valuation expectations. However, as market corrections take hold, we anticipate these inflated valuations will begin to moderate."
Strategic buyers are showing increased selectivity in their acquisition strategies. Some, particularly in sectors affected by global uncertainties, have temporarily halted external growth initiatives. This pause has further reduced competition for targets, easing valuation pressures in certain markets.
Factors believed to have impacted valuation trends
How are valuation trends expected to shift in the next 12 months?
Valuations and funding outlook
The consensus across the Baker Tilly network is that valuation trends will remain stable in 2025, albeit with regional variations based on local economic and political conditions. While factors such as liquidity and demand may keep valuations elevated in some markets, broader economic pressures and geopolitical risks are likely to temper overly optimistic trends, thus closing the gap between valuation expectations. This misalignment between buyers and sellers on valuation started to close in 2024, as highlighted by The (London) Times.
As businesses navigate these challenges, strategic planning and robust financial analysis will be essential. Whether adapting deal structures, leveraging liquidity, or targeting undervalued assets, market participants must remain agile and forward-thinking to capitalise on opportunities while managing risks. While managing risk, the renewed optimism in the UK funding market will need to remain positive so as to play its value part in global and domestic transactions. Greg Taylor reviews 2024 and offers an insight to what this current year may look like from a lending and funding perspective.
Concluding thoughts
"2025 will be an interesting year for us all as dealmakers. I would like to thank my colleagues from around the globe for their valued contribution to this year's report and I look forward to hearing from them in twelve months' time to see how their predictions have fared."
Report contributors
Nitin Arora
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Nicolas-Pierre Baume
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William A. Chapman
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Adrian Cheow
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Antoine Duval
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Dr Andreas Fröhlich
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Saber Chbani Idrissi
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Mike McIsaac
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Michael Milani
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Xavi Mercadé Sanmartí
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Michael Sonego
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Oliver Willems
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