Global mergers and acquisitions (M&A) activity is expected to face headwinds in 2025, with sentiment shifting due to a combination of geopolitical uncertainty and economic concerns.
This outlook emerges from a Norton Rose Fulbright survey, conducted by Mergermarket in the first quarter of 2025 (Q1 2025), of 200 senior-level executives involved in cross-border M&A deals valued at US$200 million or more.
Initially, over half of the respondents (53%) projected an increase in M&A appetite compared to 2024.
However, following the US government’s introduction of new tariffs in April, a follow-up revealed that nearly 70% of those surveyed reported a decline in deal appetite, citing heightened trade tensions.
Respondents also flagged several operational challenges impacting deal feasibility, including:
Technology, particularly artificial intelligence, continues to reshape how deals are sourced and executed.
Survey findings showed that 51% of participating firms had already completed acquisitions of AI-related businesses. A further 46% indicated plans to pursue such transactions in the near term, reflecting a marked increase from the 33% reported in 2024.
Organisations are integrating AI to streamline various aspects of deal activity, including pre-deal analysis and due diligence, underscoring its growing role in transaction execution.
As macroeconomic uncertainty clouds traditional lending avenues, dealmakers are increasingly turning to alternative capital sources.
Around 35% of those surveyed believe that securing financing for M&A will become more difficult in 2025.
In response, private credit is gaining traction, with 25% of executives identifying it as the most likely funding method for upcoming deals – particularly in markets facing financial or political instability.
Private equity (PE) firms are positioned to be among the most active buyers in 2025, according to 44% of respondents.
Domestic PE activity is forecast to focus on South and Southeast Asia, with international firms eyeing East Asia, Europe, and Oceania.
The anticipated reactivation of PE capital signals confidence in select regional markets despite broader volatility.
Representations and warranties (R&W) insurance – or warranties and indemnities (W&I) insurance outside North America – is expected to see expanded application in 2025.
Nearly two-thirds of respondents (65%) projected increased use, including 37% who foresee a significant uptick. The Middle East is expected to experience the most pronounced growth in this insurance segment, with 47% of executives anticipating a sharp rise in adoption.
This trend suggests that buyers and sellers are increasingly relying on insurance products to manage post-transaction risk and facilitate smoother deal closures.
Separate research by GlobalData showed that the Asia-Pacific region experienced a 2.6% drop in overall deal activity during the first four months of 2025. The decline was largely attributed to an 8.2% decrease in venture capital funding.
Meanwhile, mergers and acquisitions saw a modest 2.4% rise, and private equity activity edged up by approximately 2%.
According to Aurojyoti Bose, lead analyst at GlobalData, the region is seeing contrasting trends. He noted that M&A and private equity are showing some resilience, but venture capital activity is clearly lagging.
China recorded the steepest decline, with volumes dropping by more than 15%. In contrast, India and Japan saw year-over-year growth of 13% and 25%, respectively.
Other key markets, including South Korea, Singapore, and Australia, posted declines, pointing to fragmented momentum across the region.
