Waves build in the global market

The dealmaking tide is on the turn. The recent US election is only one of several geopolitical and economic currents making waves around the world. The implications for dealmakers in the coming year is the theme of our on-demand webinar series. The 2025 Global M&A Outlook is produced by the Financial Times in partnership with Datasite, and offers key insights into how this tide is variously affecting the regions of the Americas, EMEA, and APAC.

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When economic tides coincide

The most striking dynamic at work here is the contrast between events in the US, and in its great economic rival China. Just as China’s economy is slowing due to tightening regulation, the US has appointed a government on a platform of deregulation and aggressively pro-business policies. For the past year the APAC region has trailed the rest of the world, with deal value declining by a startling 32% against a 5% average global increase. By contrast, a mere two weeks after Trump’s re-election, Datasite saw M&A activity in the Americas jump by 44% – suggesting that this gap may prove hard to close.

But China’s not the only economic force in APAC. Across the region as a whole, deal volumes have actually been increasing despite the value slump, thanks to fresh interest in India and Japan as likely challengers to China’s crown. India in particular has benefited from the ‘China Plus One’ strategy, whereby companies diversify their manufacturing and sourcing operations beyond China by adding production facilities in at least one other country. Meanwhile China’s outbound investment remains pretty healthy.

Poised between these two giants we have EMEA. In the wake of the US election, European M&A activity jumped by 19% – showing the extent to which simply reducing uncertainty can stimulate dealmaking. Like the US (but unlike APAC), EMEA has seen a dearth of volumes compared to values; the scene may now be set for this imbalance to correct itself.  With the relative stability of Europe being offset by intense geopolitical turmoil in other places, EMEA has the potential for some of the most dynamic activity.

Rising AI lifts several sectors

It’s clear that no region is an island – where one sneezes, another catches a cold (or markets a new vaccine). And we see a similar connectedness at the sector level.

For instance, TMT has proved a front-running sector for some time, driven in part by the AI boom. But, as the experts note in the APAC webinar, AI technology requires massive data centers, and data centers demand lots of energy. So any surge in TMT activity will make waves across the energy & utilities sector too. Then we have pharma, medical & biotech – the other sector most expected to dominate in 2025. The potential for AI to enhance and accelerate pharmaceutical research is self-evident – hence pharma deals may take place with one eye on technology bolt-ons that can reinforce the core asset.

Our webinars’ live audience offered intriguing insights as to expected deal activity in key sectors. Though these are broadly aligned across the regions, there are some interesting, even extreme variations. For example, although TMT is expected to dominate across EMEA and APAC, it raises barely a ripple in the Americas, which is all about energy & utilities, or pharma, medical & biotech. And while both pharma and energy are front-runners in EMEA too, they merely flicker on the APAC radar, where the consumer sector is looming close behind TMT (consumer is all but invisible in the other regions).

Many of our expert panel agreed that AI is the pivotal issue – some ruefully remarked that it was hard not to bring it into every discussion. On the one hand, there’s a wariness about what might be ‘dot com bubble 2.0’. On the other, many panellists concede that even imperfect investments in AI may be better than missing the boat altogether. On top of which, there are the very exciting prospects of how AI-powered tools can improve and speed up the dealmaking process itself.

Given AI’s strenuous energy demands, the US election results have thoroughly shaken up the energy sector once more. The Trump administration’s more relaxed attitude to fossil fuels should reignite activity in those areas, and perhaps take some of the wind out of renewable energy’s sails. Nevertheless, the connected global picture should still see renewables to the fore, with APAC especially driving that sub-sector.

Just add liquidity…

One of the biggest challenges recently, across all regions, has been liquidity. As one panellist on the Americas webinar put it, ‘There’s a lot of money out there chasing very few deals’. High interest rates and costly capital have been the global trend for some time, driving down deal numbers – though values have broadly held up thanks to some cherry-picked megadeals. With global pressure now on lowering those rates (or at least their upward trajectory), much pent-up PE capital should soon spill out into the market.

The liquidity drought has prompted a number of innovative and aggressive financing solutions, most notably a rise in the use of continuation funds, which let private equity funds retain high-performing assets for longer.  But there are signs that this ‘refinancing market’ is now changing, and the banks too are ready to get back to business and start lending again.

When it comes to getting deals across the finishing line, our webinar audiences agreed on the need for strong valuation analysis and negotiation – the highest priority in APAC, and second-placed in the other regions. The Americas concurred with APAC that local market knowledge is also vital – placing it first to APAC’s second – while EMEA respondents took a different tack, citing creative deal structuring as the key to success.

Track the changing deal climate

Our three webinars present an intricate picture of global M&A at the turn of the tide. There are many different currents at play; not all regions will feel their effects at the same time or in the same way. But with cross-border deals and investments on the rise, and the fundamental connections between the different regions and sectors, the overall outlook is one of growing opportunities for dealmakers who are quick to act.

Asking our audience once again, most saw the greatest opportunity arising from corporate strategic transactions – the top choice for AMERS and APAC, and second for EMEA. Also full of promise are divestitures, liquidations, bolt-ons and deals of a similar nature. APAC was a notable discrepancy once again, with high expectations for cross-border transactions too; these did not feature much on the others’ radar.

Maximize your chances of identifying opportunities of your own – access the 2025 Global M&A Outlook webinar series, brought to you by the Financial Times in partnership with Datasite.

Global M&A Outlook Series - On-Demand
in partnership with the Financial Times