Four M&A trends that will drive 2025’s deals rebound

After a mixed year for mergers & acquisitions (M&A) over the past twelve months, new research from WTW shows that deal activity is set for a rebound in 2025. WTW leader Gabe Langerak shares four trends that are set to drive much of the market’s growth trajectory.

1) Consolidation and rise of mid-market deals

Due to a shortage of high-quality M&A targets during 2024, corporates are now sitting on a record cash pile that must be directed somewhere. With deal flow predicted to increase during the next 12 months, investment will be focused on core revenue-generating functions that enhance competitive edge, with divestment of non-core assets.

While the market was top-heavy during 2024, according to data from WTW (formerly Willis Towers Watson), mid-market M&A activity looks set to surge in 2025 driven by increased margin pressure, the push for scale and inorganic growth as a means to accelerate digital transformation. Under pressure to deploy vast sums of capital, private equity buyers will also see this upswing in carve outs and spin-offs as an opportunity to generate value.

2) AI’s watershed moment

Digital transformation and the burgeoning use of AI in the deal process will be a big story in 2025. Technology-driven dealmaking is being advanced by companies seeking to integrate AI capabilities – including automation, cloud computing and cybersecurity – in order to remain competitive in a digital-first world.

With technology already cutting through every deal, the next question is whether 2025 will be a watershed moment for GenAI when the fog of hype clears and its true value is revealed, including its potential as a powerful new tool for streamlining the resource-intensive M&A process, from target identification to due diligence and integration.

3) Economic stabilisation

Improving economic conditions and market sentiment, especially in markets outside the GCC, should give much-needed predictability for buyers to plan their financing, especially for mid-sized companies reliant on borrowing, and a more stable foundation for more deal activity.

The strong equity markets should also be a key driver of M&A, usually corresponding with a positive economic outlook and high CEO confidence.

4) Regulatory limbo

Dealmakers will be energised by the prospect of reduced regulation and cautious as they adopt a ‘wait-and-see’ approach regarding which policies are actually enacted by the incoming White House administration. More highly regulated sectors, including finance and pharmaceuticals, where antitrust oversight could loosen, are likely to see a lift in M&A activity.

About the author: Gabe Langerak is Head of Corporate M&A Consulting for Central Eastern Europe, the Middle East and Africa. He is based in WTW’s Dubai office.

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