Global mergers and acquisitions (M&A) activity is expected to face significant headwinds in 2025, as geopolitical uncertainty, trade tensions, and financing challenges weigh heavily on investor sentiment. This outlook comes from a new Norton Rose Fulbright survey of 200 senior executives involved in cross-border M&A deals valued at $200 million or more.
Shift in Sentiment Since U.S. Tariffs
Initially, 53% of respondents said they expected increased deal activity compared to 2024. However, following new U.S. tariffs introduced in April, that optimism has faded. A follow-up poll showed that nearly 70% of executives have downgraded their deal-making plans due to escalating trade tensions.
Operational challenges, including supply chain disruptions, local economic risks, and uncertainty over financing, have added to concerns around the feasibility of deals.
AI Integration Fuels Tech-Driven M&A
Despite broader market concerns, M&A focused on artificial intelligence (AI) is on the rise. The survey found that 51% of companies have already acquired AI-focused businesses, while another 46% plan to do so in the near future—a sharp increase from 33% in 2024.
Firms are leveraging AI to enhance pre-deal analysis, due diligence, and other execution-related processes, highlighting the increasing role of technology in modern deal-making.
Private Credit to Bridge the Financing Gap
With 35% of respondents warning that traditional M&A financing is becoming harder to obtain, attention is turning to private credit as an alternative. About 25% of executives believe private credit will be the most viable funding option in 2025, particularly in regions facing financial or political instability.
Private Equity Poised for a Comeback
Private equity (PE) is also expected to re-enter the market with strength. Around 44% of survey participants predict that PE firms will be among the most active M&A buyers in 2025.
While domestic PE activity is forecast to be strongest in South and Southeast Asia, international PE firms are eyeing opportunities in East Asia, Europe, and Australasia, indicating confidence in select regional markets despite global volatility.
Transaction Insurance Gains Popularity
Use of Representations and Warranties (R&W) insurance—also known as W&I insurance outside of North America—is set to grow significantly in 2025. Nearly 65% of executives expect increased use, with 37% anticipating a major rise in adoption.
The Middle East is expected to lead this trend, with 47% of respondents predicting a strong increase in the region. This shift reflects growing reliance on insurance to mitigate post-deal risks and speed up transaction closures.
Mixed M&A Performance in Asia Pacific
In a separate study by GlobalData, total deal volume in Asia Pacific declined 2.6% in the first four months of 2025. The drop was largely driven by an 8.2% fall in venture capital funding.
However, M&A activity in the region rose by 2.4%, and private equity transactions edged up around 2%, showing relative resilience compared to venture capital.
China experienced the sharpest contraction in exports—down over 15% year-on-year. In contrast, India and Japan posted export growth of 13% and 25%, respectively. Other major markets such as South Korea, Singapore, and Australia recorded export declines, reflecting fragmented momentum in Asia-Pacific.
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