Perspectives
M&A market outlook 2025: Resilience fuels renewed growth
The global M&A market rebounded strongly in 2024, fueled by easing recession concerns, stabilizing interest rates, and a renewed sense of corporate optimism. While challenges persisted, key sectors demonstrated resilience and adaptability, laying the groundwork for sustained growth. As the market gains momentum, Deloitte Corporate Finance LLC (DCF) remains committed to guiding clients through a dynamic landscape, helping them unlock opportunities and achieve strategic success in 2025.
2024: A year of recovery and optimism
After a challenging period marked by a 34.7% decline in deal value by the end of 2023 from the peak levels of 2021, the global M&A market turned a corner in 2024. Compared to the previous year, the market saw a 13.2% increase in deal count and a 26.8% rise in deal value through Q3.
This recovery was driven by improved corporate sentiment, with only 35% of CEOs anticipating a recession in the next 12 to 18 months, down from 72% at the end of 2023. Lower interest rates also played a crucial role, making financing more accessible and attractive for both corporate and private equity buyers.
In 2025, the U.S. M&A market is set for dynamic growth, supported by favorable lending conditions, advancements in artificial intelligence, sector-specific consolidations, and robust public market performance. With private equity firms eager to deploy capital and the public markets showing resilience, DCF remains optimistic about navigating this evolving landscape and supporting business owners in exploring growth and liquidity options.
Industry outlooks
The debt markets in 2024 showed incredible resilience, navigating a shifting landscape with adaptability. As interest rates edged lower and repricing activity hit record levels, private lenders stepped into the spotlight, offering creative solutions and flexible terms. With commercial banks recalibrating their focus, private debt became the go-to option for businesses looking to refinance and grow.
Even in a challenging environment of high interest rates and economic uncertainty, default rates stayed impressively low, thanks to careful risk management and strategic planning. The debt market is set to thrive in 2025, driven by stronger M&A activity and a renewed appetite for innovation in private credit.
Amid regulatory pressures and escalating costs, the life sciences and health care sector in 2024 showcased a complex yet promising landscape, with pockets of growth emerging in high-demand subsectors like medical aesthetics and outsourced pharmaceutical services. Despite these headwinds, sub-verticals like medical aesthetics, infusion, veterinary, dental, and outpatient mental health emerged as growth areas, attracting high valuations due to their fragmentation and scarcity of scaled platforms. In the latter half of 2024, optimism grew, particularly in health care information technology and outsourced pharmaceutical services, where deal activity intensified.
In 2025, stabilized macroeconomic conditions are expected to fuel M&A acceleration. Key growth areas poised for investor interest include consumer-driven health products, value-based care models, telehealth, home-based care, and consolidation of fragmented providers. Both strategic acquirers and private equity investors are well-positioned to capitalize on these trends, driving innovation and efficiency across the sector.
M&A activity in the business and financial services sectors surged in 2024, propelled by technological advancements, regulatory evolution, market consolidation, and a growing emphasis on sustainability and talent management.
As we look into 2025, the sector is primed for growth, with key trends shaping M&A activity, including talent as a strategic asset, AI and machine learning integration, and customer experience excellence.
In 2024, the TMT sector demonstrated resilience, capturing 20% of global M&A transaction value. Companies leveraged acquisitions to integrate advanced AI/ML capabilities, streamline operations, and enhance digital distribution channels, enabling faster market entry and diversification. The convergence of TMT subsectors further fueled activity as businesses incorporated digital solutions into traditional offerings.
Looking ahead, 2025 holds growth potential for the sector, driven by private equity dry powder, declining capital costs, and opportunities for digital transformation. Enterprise software spending is expected to continue favoring automation and AI, as businesses prioritize solutions that optimize operations and deliver cost efficiencies. IT services will see increased demand for AI-enabled data analytics and robust cybersecurity solutions, with hybrid delivery models offering flexibility and scalability to meet global needs. In the media industry, consolidation has emerged as a key strategy to adapt to shifting consumer preferences and financial pressures. Companies will increasingly rely on partnerships, bundling, and international market expansion to achieve scalability and profitability.
Marked by rising valuations and strategic activity, the consumer products and services sector in 2024 weathered economic challenges while benefiting from renewed investor confidence and shifts in consumer demand. A drop in the U.S. inflation rate to 2.6% as of October 2024, coupled with easing interest rates, created a more favorable lending environment, setting the stage for sustained M&A activity in 2025. The average deal value in the consumer sector grew by 21.6% year-over-year, although private equity firms remained cautious due to valuation gaps between buyers and sellers. Strategic acquirers dominated the market, accounting for 86% of deal volume and 92% of deal value by Q3 2024.
In 2025, the sector is set to capitalize on converging buyer and seller expectations, supported by strong private equity activity and a dynamic financing environment.
The industrials sector began to stabilize in 2024, benefiting from legislative tailwinds, steadying costs, and an infusion of record-breaking private investment into U.S. manufacturing. Landmark legislation from recent years spurred growth across clean energy, semiconductors, and electric vehicles, boosting confidence.
The focus will remain on clean energy transitions, reshoring, automation, and a recovering transportation market in 2025. While geopolitical and trade uncertainties persist, the sector is primed for further growth as stability returns.
Seizing opportunities in a transforming landscape
The M&A market in 2025 offers a promising yet complex environment, shaped by technological advancements, evolving consumer preferences, and shifting economic conditions. Industries that embrace innovation, adaptability, and strategic investment will be well-positioned to unlock growth and create long-term value. Deloitte Corporate Finance LLC stands ready to support clients in navigating these dynamics, turning challenges into opportunities for sustained success.