Deal-prep Data Shows Global M&A Volumes Likely to Grow in 2025 - VDR Insight

by Rupert Cocke with analytics by Izaz Ansari 
Mergermarket

Summary

• Deal value in Americas expected to grow 2%-5% in 1H25, driven by energy and healthcare
• EMEA expected to grow above 10% in 1H25, driven by Western Europe
• APAC expected to grow around 5% in 1Q25, driven by technology demand
  

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Providers of virtual data rooms (VDRs), who have a unique perspective on upcoming M&A volumes, are bullish that deal activity will continue to flourish in 2025.

Announced deal volumes in the Americas are expected to show a growth of 2% to 5% in 1H25, according to SS&C Intralinks Co-CEO Bob Petrocchi.

Dealmakers in the US will seek opportunities in areas like energy and sustainability, as well as healthcare and life sciences, according to Datasite President and CEO Rusty Wiley.

Meanwhile, European markets like France, Germany and Spain are showing potential, driving expected growth rates above 10% for Europe, the Middle East and Africa (EMEA), Petrocchi said. Asia Pacific (APAC) is expected to grow around 5%, with Hong Kong, India and Japan leading the way, he added.

This year could be “the year of the M&A rebound” in EMEA, Wiley said, adding that Eastern Europe, Turkey and the Middle East will be in focus as investors seek undervalued assets. Technology will be a driving factor in APAC, he added.

Global M&A volumes rose 13% to USD 3.57trn across 40,189 deals in 2024 compared to 2023. The Americas was the busiest region, contributing 51% of overall deal volumes; followed by Europe, the Middle East and Africa (EMEA), which made up 25%; and Asia-Pacific (APAC) with 24%.

A takeover battle for  Seven & i Holdings [TYO:3382] was the biggest deal of the year. The Japanese retailer received a third offer from Alimentation Couche-Tard [TSE:ATD] of Canada. A proposed management buyout (MBO), which is acting as a white knight counterbid, could be worth JPY 9trn (USD 58.16bn) – 1.6% of the total global M&A volumes for the year.

One name to watch in Europe in 1H25 is  CapVest-backed Curium, which is expected to come up for sale this year, five years after its sponsor placed it in a continuation fund. The French radiopharmaceuticals company has EBITDA around EUR 240m.

Meanwhile,  Rubix Foods of Florida could also come to market in the Americas. The company, which is backed by Arbor Investments, has above USD 50m in run-rate EBITDA.

Finally, in APAC,  Pioneer's sponsor EQT [NYSE:EQT] could begin the sale of Japan-based manufacturer of car navigation and audio systems early this year. It generated EBITDA of USD 175m for 2023.

Datasite President and CEO Rusty Wiley

1. How has the volume of new VDRs on your platform progressed through the second half of 2024?

In 2H24, dealmakers shifted their strategies to a more measured approach, that included strategic pauses and selective activity, though end-to-end, deals on Datasite took roughly 10 months versus 11 months in 2023. Global M&A hold rates on Datasite climbed 25% in 2024, as election-driven uncertainties triggered dealmakers to hit the brakes. More than four in 10 (45%) M&A professionals also extended transaction timelines, reflecting the heightened uncertainty surrounding national elections and potential regulatory and trade policy changes.

The AmericasDespite pauses and extensions, 2H24 Americas deal kick-offs on Datasite rose 9% compared to the same time a year ago. Confidence fuelled by post-US election policy clarity helped drive some of this activity. In fact, in the three weeks after the election, new deal kick-offs on Datasite soared by more than 50% year over year. While the specifics are not known, there is the general expectation that the new administration will adopt a pro-business position through regulatory reforms, including protectionist measures that favour US businesses and promote internal productivity and growth. This potential deregulated environment, combined with corporate-friendly tax policies, could create fertile ground for dealmakers and innovation alike.

EMEA
While 2H24 EMEA deal kick-offs on Datasite rose 11% compared to the same time a year ago, this doesn’t tell the full picture. After a 29% activity surge in October, deal kick-offs slowed to just 11% in November, likely in response to concern over US trade tensions under the incoming administration, with industrials deals taking the biggest hit.

APAC
After a frothy first half, where deal kick-offs rose more than 60%, 2H APAC deal kick-offs on Datasite have receded, dropping 8% year-over-year. Fears of heightened trade tensions with the US next year may be impacting dealmaker sentiment.

2. Given that it takes an average of six months to close a deal from opening a VDR, what do you think deal volumes will be like in the first half of 2025? 

The political stability and, to some extent, predictability resulting from several national elections in 2024 will positively influence the risk, feasibility, valuation, and potentially the timeline for completing deals in the future. Additionally, a surge of deal activity from earlier in 2024 reached critical stages in November and December, colliding with a new wave of post-election deal launches. At the end of the year, dealmakers faced a balancing act: closing deals from earlier in the year while managing new activity that sets the foundation for 2025.

The Americas
There could be a shift in the types of deals being executed in the next 12 months. Dealmakers will seek opportunities in sectors that are likely to benefit from a change in government policies, such as energy and sustainability, and healthcare and life sciences. Dealmakers could also decide to pull out of existing deals in sectors that might not be poised for the same level of growth or opportunity. The outlook for less regulatory pressures may also prompt boards to explore all opportunities, including larger transactions.

EMEA
Dealmakers are cautiously optimistic – the pick-up in sell-side activity is a promising development, and 2025 might well be known as the year of the M&A rebound. Dealmaking in 2025 is expected to be more diverse geographically too. Emerging markets in Eastern Europe, and the Middle East, especially Turkey, are becoming increasingly attractive for dealmakers seeking undervalued assets and fresh market points.

APAC
The recent upturn in M&A deal value across APAC is a promising development for the region and foreign bidders are back with a vengeance. Regional tailwinds are leading to a surge in cross-border dealmaking and renewed anticipation is building for APAC M&A activity in 2025, driven by technology demand and Southeast Asia’s digital evolution.

3. Which sectors are the most active?

Technology, media and telecommunications (TMT) and healthcare and life sciences are leading global deal activity, especially after post-election regulatory clarity. Additionally, dealmakers are eyeing the potential for strategic investments within the AI and cybersecurity industries and consumer M&A is gaining traction, buoyed by wellness interest and e-commerce growth.

The Americas
In addition to a rise in TMT, Americas industrial deal kick-offs on Datasite surged 24% in the second half, year-over-year, largely driven by digital transformation and AI adoption.

EMEA
Business services, including professional services, present a compelling investment opportunity, as companies able to navigate complex operational challenges are potentially attractive acquisition targets for larger enterprises seeking to enhance their offerings. This is evident on Datasite, where EMEA business service deal kick-offs are up 28% in the second half, year over year.

APAC 
From intelligent factory development in China to outsourced IT services innovation in India, companies in Asia are investing in AI and technology. In fact, the excitement of AI’s potential has led 2H 2024 APAC TMT deal kick-offs on Datasite to climb by more than 400% year-over-year.