After three years of underwhelming activity, 2025 is set to be the year that the M&A market breaks through. In its latest Global M&A Report 2025, Bain & Company said it expects the two biggest inhibitors to recent deals—interest rates and regulatory challenges—to ease in 2025.
M&A and divestitures will be critical tools for companies navigating shifting profit pools amid technology disruption and a post-globalization economy, the firm says.
“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. “
Factors supporting growth in 2025
Intrinsic demand for deals remains high in the M&A market, even if activity currently remains low. M&A is central to business strategy as companies seek pathways to grow as they balance risk and reward during a period of uneven economic outlooks, supply chain disruptions and geopolitical tensions. And financial sponsors are eager to put money to work, too, said Bain.
“While we saw a modest recovery last year, deal value remains historically low as a percentage of global GDP as headwinds have stifled dealmaking for the past three years. Even throughout the slow period, the best companies have persisted, learning how to navigate unfavorable market realities to deliver inorganic growth. Now, as headwinds become less acute, more companies will join those that have learned how to adapt,” added Baird.
Moreover, the pipeline of supply has been building in the M&A market. Everyone, from corporates refocusing their strategies to private equity and venture capital firms pressured to provide liquidity, seems to have at least a few assets that they wish to sell once the market comes back and valuations rise.
Meanwhile, new administrations in the EU and U.S. are ushering more openness to M&A. In 2025, strategic dealmakers will look beyond near-term swings in market momentum to find the right deals to be competitive, profitable and enable sustainable growth.
Tech to cause most strategic transformation in M&A
Technology disruption is the long-term shift that will result in the most strategic transformation in the M&A market in the years ahead. Generative AI, automation, renewable energy and quantum computing are just a few of the technologies that companies will need to build or buy to maintain competitive offerings and cost positions. Tech and non-tech companies alike will continue to have voracious appetites for tech deals to retool their businesses, added Bain.
Post-globalization and shifting profit pools will also continue to drive deals, as executives reevaluate their global footprints to ensure access to attractive end markets and security of supply while adapting their strategies toward shifting profit pools of all types.
Bain’s survey of more than 300 M&A practitioners found that 21 percent are currently using generative AI for M&A, up from 16 percent a year ago. The survey also found that one in three practitioners expect to be using it by the end of the year.
While the most common use cases currently revolve around finding and validating deals, Bain expects every single step of the M&A process to involve generative AI in the next five years.
Middle East M&A market outlook strong
The Middle East market saw a notable surge in M&A activity in 2024, with deal value reaching $29 billion, a 52 percent increase from the previous year. Sovereign wealth funds and government-related entities continue to dominate the region’s M&A landscape, with Saudi Arabia and the UAE comprising the majority of this deal value.
In particular, the energy and natural resources sectors remain pivotal, with energy-related deals representing nearly 80 percent of the total deal value. Notably, the largest deal of the year was Saudi Arabian Oil Co.’s acquisition of Rabigh Refining & Petrochemical Co. for $8.9 billion.
Moreover, advanced manufacturing and technology sectors have seen impressive growth, with tech-related deals doubling in value.
Cross-regional investments drive Middle East market growth
“2024 has proven to be a transformative year for the region’s M&A activity. 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, especially in energy transition and technology sectors. The UAE’s investor-friendly regulations are further enhancing the region’s role as a key global player in M&A,” stated Gregory Garnier, partner at Bain & Company and head of the Private Equity and Sovereign Wealth Fund practice in the Middle East.
Middle Eastern acquirers have also ramped up investments in Europe, with a 120 percent increase in strategic deal value for European targets. This trend contrasts sharply with a significant drop in investments in the Asia-Pacific region, where strategic deals fell by 78 percent in 2024.
Local companies are also showing a notable interest in joint venture activities, particularly within industrial sectors such as renewable energy. Saudi Arabia’s sovereign wealth fund, for example, completed three joint ventures for solar and wind projects last year.
