Global M&A Report Q1 2025

By Mergermarket

Go, stop and go

Global M&A volume rose 15.5% to USD 827bn in the quarter to date (24 March) driven by five mega deals in March. However, the number of transactions fell to a two-decade low, with 6,955 deals announced so far.

The uncertainty stemming from US President Donald Trump’s aggressive policies on tariffs, Ukraine and the Middle East has caused dealmakers to hit pause on sale processes, reassess business models and valuations.

Several multi-billion-dollar deals, in the works since Trump’s election victory last November, remain unsigned. Initially, his win sparked optimism for a ‘Trump bump’ in M&A driven by expectations of a more business-friendly environment, less regulation and lower corporate taxes.

But following his inauguration on 20 January, Trump's tough tariff rhetoric has jolted markets, leading instead to a ‘Trump slump’. Still, optimism remains for a rebound in announcements in the coming months as the market adjusts to the new tariff landscape.

“We're all going to be gasping for air until we get through the first quarter and probably a little bit beyond,” said Bill Curtin, global head of M&A at Hogan Lovells. “But then I think we're going to settle into a very active rhythm.”

Despite the uncertainty, M&A volume so far this year still rose compared to the same period last year. In North America, deal volume was up 4% to USD 448.3bn for the year-to-date period. The Europe, Middle East, and Africa region continued its rebound, with deal volume up 23.4% to USD 197.2bn. Asia Pacific reversed three years of declines to record deal volume of USD 166.7bn, up 53.4% from last year’s decade low.

March Madness

In March, five mega deals – defined as transactions valued at USD 10bn or more – brightened the quarter. Leading the way was Alphabet’s USD 32bn deal for cybersecurity firm Wiz, the biggest of 2025 so far. March also saw OMV and Abu Dhabi’s ADNOC merge their polyolefins businesses in a USD 16.5bn deal, followed by their USD 13.4bn acquisition of Nova Chemicals from Mubadala Investment.

The biggest deals of 1Q25 have compelling reasons regardless of the geopolitical uncertainty. For example, the surge in demand for electricity to power artificial intelligence drove the quarter’s second largest transaction: Constellation Energy’s pending USD 29.4bn acquisition of Calpine, announced in January.

In a deal that highlights the evolving framework for foreign investment under Donald Trump, a consortium led by BlackRock acquired several global port operations from Hong Kong-based CK Hutchison for USD 19.2bn. The deal, another of those announced in March, includes two ports in the Panama Canal and came weeks after Trump spoke of the need to reclaim the waterway from Chinese control.

Johnson & Johnson’s proposed USD 15.5bn purchase of Intra-Cellular Therapies in January, aimed at expanding its neuroscience portfolio, marked the largest pharmaceutical deal since 2023 and hinted at a resurgence in Big Pharma dealmaking.

One bright spot is private equity, with PE exit volumes up 49% to USD 131.3bn and buyouts up 58% to USD 152.4bn. Sycamore’s USD 23.7bn buyout of Walgreens Boots Alliance, announced in March, showcased private equity’s buying power and appetite for salvage projects. At its peak in 2015, the pharmacy chain’s market cap exceeded USD 100bn.

Financial Sponsors: A recovery begins to take shape

After a prolonged period of uncertainty driven by higher interest rates and market volatility, global buyout activity has started to pick up. Fueled by increased investor confidence and the US Federal Reserve's interest rate cuts, global buyout volume increased 58% to USD 152.4bn in 1Q25 compared to the same period last year. Meanwhile, the number of buyouts fell 25% to 569, the lowest since 3Q20.

Buyout volumes in North America increased 42% year-over-year to USD 82.8bn. Asia Pacific’s volume increased 253% to USD 46.8bn, and EMEA’s first-quarter volume increased by 6.5% to USD 22.5bn. Walgreens Boot Alliance’s sale to Sycamore Partners for USD 23.7bn was the quarter’s biggest buyout. The USD 19.2bn sale of Hong Kong-based CK Hutchison's ports to a consortium led by BlackRock was another major buyout.

In total, 33 buyouts valued at more than USD 1bn were agreed in 1Q25, compared to 20 in 1Q24.

Technology remains a key area of interest for financial sponsors, with 154 buyouts worth USD 17.3bn signed in 1Q25. However, this represents an almost 50% drop in volume from the previous year, with the sector accounting for only 11% of all buyout volume.

Exit surge

Sponsor exits totaled USD 131.3bn in 1Q25, up 49% from a year earlier. The number of exits declined by 17% to 271 over the same period. Sales to strategics accounted for 67% of exits in 1Q25, consistent with a year earlier. Public markets have started to reopen as a liquidity option, with sponsors exiting seven companies through IPOs, matching last year’s figures.

Several private equity groups are positioning their portfolio companies for an exit. They include Partners Group's Ammega Group, Hellman & Friedman-backed Verisure, and Brookfield-backed CleanMax.

Exit activity is expected to increase as funds face pressure to deliver returns to investors. Major private equity firms are launching new funds, including Partners Group’s evergreen fund for institutional investors, and Franklin Templeton’s open-end fund. eQ is also planning a new vintage US-focused PE fund series as well as its next venture fund in late 2025.

US trade policies, especially tariffs, can have wide-ranging effects on trade flows, investor confidence, and global stock markets. Financial sponsors will need to regularly assess market conditions by examining macroeconomic trends, trade policies, and the impact of industry-specific tariffs to proactively adjust their investment strategies.

North America: Tariff volatility hits dealmaking momentum (but only temporarily)

Alphabet’s USD 32bn acquisition in March of cybersecurity firm Wiz, the Google parent’s largest deal ever, gave some last-minute shine to the North American M&A market’s 1Q25 performance. M&A volume totaled USD 448.3bn in the year to date (YTD), up 4% from the same period last year. Deal count, meanwhile, sank to 2,158 from 2,901.

The year had started with optimism from dealmakers hungry for deals after a slow show in 2022-23 and encouraging signs of recovery in 2024. But uncertainty arising from US President Donald Trump’s aggressive tariff policy, a stock market correction and slowing economic growth forecasts quickly dampened the mood.

Deal volume in January totaled USD 154.8bn, up 15% on the prior month. In February, Trump’s first full month in office, M&A volume sank 24% sequentially to USD 118.3bn, before recovering in March with USD 175.2bn worth of deals.

In fact, six of the top 10 deals in the region were recorded in March, including Alphabet’s acquisition of Wiz and Sycamore Partners’ buyout of drugstore operator Walgreens Boots Alliance for USD 23.7bn.

Sector highlights

Technology remained North America’s most active sector at USD 124bn across 596 deals, representing 28% of the region’s M&A volume and up on the USD 118bn announced in the same period last year. The Google-Wiz deal was the largest tech deal of the quarter, followed by the USD 6.7bn pending acquisition of Allegro Microsystems by ON Semiconductor in March.

Google’s acquisition of Wiz is the largest cybersecurity deal ever but risks scrutiny from the Federal Trade Commission. Alphabet has agreed to pay a 10% termination fee if the USD 32bn deal collapses. Wiz reportedly spurned a USD 23bn offer from Alphabet last summer. Cloud service providers like Google are adopting cybersecurity capabilities to strengthen their offerings amid the rapid advancement of AI technology.

Calpine’s USD 29bn sale to Constellation Energy helped the utility sector more than double its YTD volume to USD 58.7bn across 66 deals. This merger unites two major US electricity producers amid rising power demand from AI infrastructure. In March, sovereign investor ADQ and Energy Capital Partners formed a USD 25bn partnership to develop new power generation projects in the US. CDPQ’s acquisition of Innergrex Renewable Energy for USD 6.7bn, announced in February, was the second largest deal in the sector.

Trump's "America First" agenda could boost domestic manufacturing, making companies in traditional production, such as aluminum and steel, and new economy sectors, such as semiconductors and renewable energy, more attractive. Foreign companies, meanwhile, are considering setting up R&D centers and manufacturing facilities in the US. Unusual Machines, a Puerto Rico-based drone company, was reportedly looking to acquire similar drone component makers in the US, while Emirates Global Aluminium is evaluating two more US deals after acquiring an 80% stake in Spectro Alloys in August 2024.

Buyouts & exits

Sponsor-led activity in North America is off to a strong start, but buyer caution remains over performance and the impact of US-imposed tariffs on valuations, causing some sale processes to stall. Longer term, executives at both Blackstone and KKR told investors in February to expect more deal flow in 2025.

A narrowing bid/ask spread has led to a surge in sponsor-led exits YTD. The largest deal involved CPPIB, Energy Capital Partners and Access Industries selling their ownership in Calpine to Constellation Energy. Exit volume reached USD 108.3bn across 143 deals, nearly 2.5x more compared with the same period last year and the second highest 1Q on Mergermarket record.

Buyout activity in the region rose 44% to USD 82.8bn in the quarter so far. Nearly 30% of buyout volume came from Sycamore’s deal for Walgreens Boots.

Several companies could transact in the next quarter. Boeing's navigation company Jeppesen is set to collect bids in the coming weeks for a USD 7bn divestiture. EQT-backed AGS Health, a medical billing and revenue cycle management firm, has attracted interest from TPG Capital, General Atlantic, Blackstone and Hillhouse Investment for a USD 1bn potential sale. Rocket Software owners Bain Capital has engaged advisors for a potential USD 8bn-USD 10bn sale.

EMEA: Relative stability puts region back in vogue

The M&A rebound in Europe, the Middle East and Africa continued in the first quarter of 2025 thanks to lowering interest rates, attractive valuations and a large historical deal backlog. Deal volume in the region rose 23.4% year-over-year to USD 197.2bn, the best start to a year since 2022 but down 14% on 4Q24’s USD 230.1bn. The number of deals signed in the first quarter fell to 2,509 from 3,862 a year earlier.

After the political disruption of recent months caused by parliamentary elections in the UK, Germany and France – Europe’s three biggest M&A markets – greater stability and visibility are returning the region to a more dynamic dealmaking environment.

“With the overhang of sellers from the past two years, the pressure on private equity firms to invest and overseas trade buyers’ interest, we’re expecting deal volume to increase this year," said Jonathan Boyers, managing director and head of Alvarez & Marsal’s corporate finance practice in EMEA.

Valuation gap

European assets are being re-rated, with companies trading at lower valuations than US stocks, although the gap is narrowing, according to Goldman Sachs.

This discount is encouraging overseas buyers, who have spent USD 44.4bn on European targets this year, the strongest start to a year for inbound dealmaking by non-European buyers since 2021. "In the last month, we’ve had more enquiries from large US corporates wanting to acquire in Europe than we had the previous year in a range of sectors like consumer, technology, and engineering," Boyers said.

In the opposite direction, German companies like engineering firm Bertrandt and pumps manufacturer KSB are examples of European businesses looking to acquire in North America for diversification, market access and innovation. So far this year, European buyers have agreed to pay USD 22.2bn across 116 deals for US targets with the UK being the largest single investor, with USD 4.4bn across 34 deals.

Within Europe, the European Commission’s new competition commissioner, Teresa Ribera Rodriguez, is expected to promote a pro-growth agenda that could involve softer antitrust rules to facilitate the formation of European champions to compete on the global stage.

Sector highlights

Italian buyers struck four of the quarter’s ten largest deals, led by Banca Monte dei Paschi di Siena’s (MPS) USD 13.8bn public offer for investment bank Mediobanca. MPS’s move is part of a bigger chess game involving Generali, in which Mediobanca holds a 13% stake. The Italian insurer has entered into a joint venture with BCPE’s France-based asset management arm Natixis Investment Managers to create Europe's largest asset manager. The shake up in Italy’s financial sector has made it the most active industry for M&A in EMEA, overtaking technology. Financial services accounted for more than 17% of the region’s overall volume in the first quarter.

In defence, the expected surge in European military spending could coincide with heightened dealmaking activity in the sector in the coming months. Germany-based RENK Group, UK-based Chemring, Melrose, Qinetiq and Senior are among those seen as potential M&A candidates.

Buyouts & exits

EMEA buyout volume is up 6.5% year-over-year to USD 22.5bn in 1Q25. Several large European assets are expected to fuel the auction pipeline in the coming months, including consumer data research unit Kantar Worldpanel, which could be worth more than GBP 5bn, and Astorg-backed French food ingredients producer Solina.

Private equity firms face mounting pressure to return capital to investors, with exit volume in EMEA up 39% year-over-year to USD 25.1bn. In Europe, 3,838 companies have now been held by sponsors for more than four years, including 907 in France, 877 in the UK, 443 in Germany, and 417 in the Nordics. For now, equity market volatility has made the IPO route challenging, leaving secondary buyouts and trade sales as the main exit options.

Bain Capital and Cinven postponed the IPO of German drug maker Stada, which was expected to launch in March. Blackstone-backed Spanish gaming company Cirsa also postponed its listing until after Easter. In March, Apollo Global Management, unexpectedly announced the sale of German bank Oldenburgische Landesbank to France-based Credit Mutuel Alliance Federale on the day its IPO was set to launch.

APAC: Financial sponsors galvanize dealmaking

Large deals backed by financial sponsors continued to power dealmaking across the Asia-Pacific region in 1Q25. Total M&A volume jumped to USD 166.7bn as of 24 March, up 53.4% from the same period a year before, while the number of transactions decreased by 13% to 2,036.

Financial sponsor buyouts surged 17x to USD 46.8bn, its highest deal volume ever. Six of the region’s 10 biggest deals were backed by financial sponsors, including the top three deals – all announced in March. They include the USD 19.2bn acquisition of Hong Kong-based Hutchinson Port by a consortium led by BlackRock; the sale of Seven & i’s superstore business to Bain Capital for USD 5.5bn; and the divestiture of Lotte Rental by South Korean conglomerate Lotte Group to Affinity Equity Partners for USD 3.8bn.

Japan and China’s momentum

Dealmaking in China – including Hong Kong – and Japan together accounted for 59.3% of total APAC volume and 66.4% of the number of transactions across the region. Japan recorded a 2.3x jump in deal volume to USD 31.6bn, with US private equity firms hogging the limelight.

Besides its acquisition of Seven & i’s superstore business, Bain Capital also purchased Mitsubishi Tanabe Pharma from Mitsubishi Chemical Group for USD 3.3bn in February. In March, KKR sold an 85% stake in Japanese supermarket chain Seiyu to Trial Holdings for USD 2.5bn.

The stock markets in mainland China and Hong Kong regained vigor thanks to policy and regulatory intervention as well as technology breakthroughs achieved by several Chinese firms. The advancement of AI firm DeepSeek served as a catalyst for a surge in the share price of China’s “Seven Titans” – Tencent, Alibaba, Xiaomi, SMIC, BYD, JD.com and NetEase.

As a result, the China Securities Regulatory Commission (CSRC) is likely to restart allowing unprofitable tech companies to list on Shanghai’s STAR Market – a move that would re-open a key avenue for PE and VC firms to exit their investments. Chinese authorities also unveiled measures to encourage M&A in the tech sector, including a pilot program to ease M&A loan policies for tech companies.

India’s buyout surge

India’s overall M&A deal volume grew by 15.4% year-over-year to USD 24.1bn, while the number of transactions plunged 39.6% to 186. Financial sponsor-backed buyouts jumped 7.7x to USD 4.2bn over the same period, while the number of buyout deals increased by almost one-third.

A stock market downturn in India is creating opportunities for private equity buyers to snap up quality assets at lower prices. Potential targets include Haier Appliances India, SmartShift Logistics Solutions, Pocket FM, AkzoNobel India’s paints business, Axis Finance, and dietary supplements producer OmniActive Health Technologies.

Meanwhile, the Modi administration continues efforts aimed at attracting foreign investors, proposing to remove curbs on foreign direct investment in the insurance sector. The Indian government is also planning to sell up to 20% of its stake in five public sector banks over the next four years to meet minimum public shareholding norms and privatize 11 airports by the end of 2025-26.

Australia, South Korea and Singapore’s strength

M&A rebounded in Australia (up 23.1% to USD 20.1bn), South Korea (up 70% to USD 11bn) and Singapore (up 3.7x to USD 6.1bn) in 1Q25.

Mining was again a bright spot for Aussie dealmaking, with Japan’s Mitsui & Co. agreeing to pay USD 5.3bn for a combined 40% interest in the Rhodes Ridge iron ore project in Australia from VOC Group Limited and AMB Holding in February. In March, Australian gold miner Ramelius Resources proposed the acquisition of peer Spartan Resources for USD 1.2bn.

In South Korea, Lotte Group’s USD 3.8bn sale of Lotte Rental to Affinity Equity Partners was notable. South Korean family-owned conglomerates, or chaebols, are embracing a more cautious approach to large-scale acquisitions and exploring divestitures of non-core assets to reduce debt levels.

Singaporean assets attracted Middle Eastern interest: Olam Group sold its remaining stake in Olam Agri to Saudi Agricultural and Livestock Investment Company (SALIC) for USD 1.78bn in February. In addition, Yinson Production secured a USD 1bn investment from an investor consortium including the Abu Dhabi Investment Authority in January. They also looked outward: Singaporean ride firm Grab began due diligence on Indonesian rival GoTo Group.

Mega uncertainties

Uncertainty surrounds the fate of mega deals such as Hutchinson Port’s sale to a BlackRock-led consortium and the proposed takeover of Japan’s Seven & i Holdings by Canada’s Alimentation Couche-Tard. The Chinese government expressed opposition to the Hutchinson deal, while Japanese economy minister Ryosei Akazawa said in January that a potential foreign acquisition of retail giant Seven & i was “heavily related” to national security.