(New York) — Global mergers and acquisitions (M&A) are set to rebound significantly in 2025, driven by a combination of economic recovery, regulatory shifts, and strategic market opportunities. Morgan Stanley’s M&A experts forecast a robust year ahead, highlighting key trends and figures that will shape deal-making across industries and regions. After a slower-than-expected recovery in 2024, the stage is set for a strong resurgence fueled by financial sponsor activity, cross-border transactions, and evolving antitrust guidelines.
Financial Sponsors and Regulatory Tailwinds to Drive M&A Growth
The anticipated recovery in M&A activity for 2025 is largely attributed to two critical factors: heightened financial sponsor participation and favorable regulatory changes in the United States. According to Morgan Stanley, private equity firms are poised to take center stage, with many sponsors nearing the end of their investment cycles. These firms will likely increase monetizations to return capital to investors and secure funding for new portfolios.
“The average age of sponsor portfolios is historically high, and monetizations have to happen,” says Tom Miles, Co-Global Head of M&A at Morgan Stanley. “This allows private equity firms to raise fresh funds and target new opportunities.”
With private equity playing a more active role, sectors such as technology, healthcare, and consumer goods are expected to dominate the M&A landscape. Notably, companies with innovative business models and scalable technology solutions will remain attractive targets for strategic buyers and financial sponsors alike.
Adding further momentum is the anticipated easing of antitrust and merger regulations under a new U.S. presidential administration. Following years of heightened scrutiny, a return to more predictable regulatory reviews is expected to encourage deal-making at higher volumes and valuations. “We expect a more traditional and predictable review process,” Miles notes. “This should spur activity, as companies gain confidence in outcomes and timelines.”
Morgan Stanley projects that deregulation, combined with robust capital reserves held by corporations and sponsors, will create a favorable environment for consolidation in key sectors. The focus will also shift toward take-private transactions, as public market volatility drives companies to seek the strategic benefits of private ownership.
Cross-Border Transactions: A Strategic Imperative
As economies continue to recover at uneven paces, cross-border M&A will remain a critical component of global deal-making in 2025. The U.S. economy has been a standout performer among G7 nations, growing 11.4% from Q4 2019 to Q3 2024, compared to the Eurozone’s 4.6% and the U.K.’s 3%. This economic strength is drawing interest from international buyers eager to tap into the U.S. market’s resilience and profitability.
“The U.S. has consistently outperformed, making it an attractive target for European companies looking to expand,” says Jan Weber, Head of EMEA M&A at Morgan Stanley. “Exposure to the U.S. market can provide much-needed growth and diversification for firms in regions experiencing slower economic recovery.”
Conversely, U.S. companies are actively pursuing acquisitions in Europe to capitalize on undervalued assets. Valuations in Europe remain structurally lower compared to those in the U.S., creating financial arbitrage opportunities for American buyers. “U.S. companies may be tactical about acquiring capabilities in Europe at attractive valuations,” Weber explains.
In addition to transatlantic activity, Japan has emerged as a key player in the cross-border M&A market. Regulatory reforms introduced in 2023, including updated takeover guidelines, have created a more conducive environment for Japanese companies to engage in overseas acquisitions. Morgan Stanley notes that Japan’s outbound investments in Europe and Asia are likely to grow as firms seek diversification and strategic alignment in global markets.
“Japan has great momentum, driven by a changing regulatory landscape and ample liquidity,” Weber says. The trend underscores the increasing globalization of M&A activity, with companies leveraging cross-border deals to enhance market access, operational efficiencies, and long-term competitiveness.
2025: A Year of Strategic Opportunity Amid Uncertainty
While the outlook for 2025 is largely positive, certain challenges remain. Policies introduced by the new U.S. administration, including potential tariff adjustments and changes to immigration laws, could create temporary headwinds in specific industries. Additionally, lingering geopolitical tensions and inflationary pressures may affect deal timelines and valuations.
Despite these uncertainties, Morgan Stanley remains optimistic about the overall trajectory of the M&A market. The firm identifies four key trends to watch in the year ahead:
- Increased Financial Sponsor Activity: Private equity firms will lead the charge, with heightened activity on both the buy and sell sides.
- Cross-Border Diversification: Companies will increasingly seek acquisitions in markets offering growth potential and strategic synergies.
- Sector Consolidation: Industries such as technology, healthcare, and energy will see significant M&A activity as companies strive to build scale and innovation capabilities.
- Regulatory Predictability: A more traditional antitrust environment in the U.S. will provide clarity and confidence for large, complex transactions.
Tom Miles emphasizes the importance of adapting to these dynamics: “Companies and investors must be strategic in identifying opportunities and mitigating risks. The rebound in M&A will reward those who are proactive and prepared.”
Looking ahead, the global M&A market in 2025 is poised to deliver substantial value for dealmakers and stakeholders. With a favorable mix of economic, regulatory, and strategic drivers, the stage is set for a transformative year that redefines the contours of global business.
