The global mergers and acquisitions landscape has experienced a remarkable transformation in 2025, with deal values surging to near-historic heights driven by artificial intelligence investments, transformational megadeals, and a strategic shift toward expansion-focused acquisitions. According to Bain & Company’s latest analysis, the year is on track to deliver the second-highest total deal value on record at a projected $4.8 trillion, representing a 36% increase compared to 2024.
This resurgence marks a dramatic reversal from the challenging post-pandemic years that saw dealmaking activity constrained by regulatory headwinds, elevated interest rates, and valuation uncertainties. The 2025 rebound demonstrates how companies across industries have recognized M&A as central to their strategic imperatives, particularly as they navigate technological disruption, evolving profit pools, and the urgent need to acquire new capabilities in an AI-driven economy.
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Megadeals and Infrequent Acquirers Drive Value Growth
The defining characteristic of 2025’s M&A resurgence has been the prevalence of megadeals worth $5 billion or more, which have propelled the year’s exceptional performance. These large-scale transactions contributed approximately 75% of strategic deal value growth, with the deal count increasing by only 5% despite the substantial surge in total value. This disparity underscores how a concentrated wave of high-value deals has reshaped the M&A landscape.
Particularly noteworthy is the participation of companies classified as “infrequent acquirers”—firms that rarely engage in M&A activity. According to Bain’s research, approximately 60% of these megadeals were executed by infrequent acquirers, representing a significant departure from historical patterns where frequent dealmakers dominated large transactions. Around two-fifths of these megadeals are transformative in scale, with values exceeding 50% of the acquirer’s market capitalization, making them potentially high-risk, high-reward endeavors that require exceptional strategic focus and organizational integration.
“Companies across industries are seeing an urgent need to reboot strategy. Amid improved deal market conditions, with both buyers and sellers more confident about valuations, strategic buyers are again putting M&A front and center to drive business growth,” said Suzanne Kumar, Executive Vice President of Bain & Company’s M&A and Divestitures practice, in the company’s report. “The number one reason for increased dealmaking was M&A’s central role in strategy, according to our survey of more than 300 M&A executives.”
Kumar emphasized the critical implications of this dealmaking rebound, noting that companies making big bets through large-ticket deals are often executing make-or-break moves. Big deals grounded in sound strategy can transform businesses and set new growth trajectories, but deals pursued for less-strategic reasons can become recipes for value destruction. The importance of clear and early answers to fundamental questions on factors such as shared vision, operating models, decision-making, execution, and culture cannot be overstated when it comes to value creation.
Technology and AI Lead the Sectoral Surge
Technology M&A has returned with extraordinary force in 2025, powered predominantly by artificial intelligence-related deals. Tech deal value surged more than 76% to $478 billion in the year-to-date, positioning the sector at the vanguard of the year’s merger activity. The AI component of this growth is particularly striking: almost half of strategic technology deal value for transactions larger than $500 million involved AI-native companies or deals that explicitly cited AI benefits as part of their strategic rationale.
The surge in AI acquisitions reflects both strategic and financial motivations. Strategic investors are seeking to integrate AI technologies into their operations, unlock synergies, and enhance their product offerings, often to gain access to valuable intellectual property, AI algorithms, or unique technologies that can strengthen market positions. Financial investors, including private equity and venture capital firms, are motivated by the growth potential and financial returns AI companies can deliver, with financial investors accounting for an average of 30% of all M&A deals in AI over the last three years.
US tech mergers totaled $543 billion in 2025, surpassing the combined figures from the previous two years. Major deals exemplifying this trend include Alphabet’s $32 billion acquisition of Wiz and HPE’s $13.4 billion purchase of Juniper Networks, highlighting consolidation in AI, cloud, and telecommunications sectors. OpenAI’s acquisition of Neptune, a specialist in AI infrastructure, and Anthropic’s purchase of Bun, a developer tools company, signal strategic intent to secure foundational technologies and streamline AI development processes.
Enterprise technology vendors have demonstrated robust acquisition appetites throughout 2025, with AI considerations woven into nearly every deal. Notable transactions include Salesforce’s $100 million acquisition of Doti AI, an Israeli startup developing agentic AI tools for the workplace, and Qualcomm’s acquisition of Arduino to expand its reach into robotics, IoT, and AI edge ecosystems. Workday agreed to buy Sana for $1.1 billion to combine AI-based search, agents, and learning with its finance and HR software, while Check Point signed an agreement to acquire Lakera, an AI-native security platform specializing in agentic AI applications.
Advanced manufacturing also emerged as a major driver of dealmaking in 2025, with value increasing 38% to $717 billion in the year-to-date. This growth reflects how industrial leaders are using acquisitions to compete in an environment where AI has become central to automation, infrastructure, and supply chain transformation.
Geographic Distribution and Market Leaders
The 2025 M&A rebound demonstrates truly global reach, with deal value across all regions and industries rising by double-digit percentages. Deals for US targets powered M&A growth, accounting for nearly half of the total strategic deal value. The United States maintained its position as the dominant market, benefiting from its advanced AI infrastructure, robust economic conditions, and relatively favorable regulatory environment for dealmaking.
Greater China emerged as the second-largest deal market, leading in deal count with a robust domestic China market that accounted for more than 80% of Greater China deal value. Despite ongoing geopolitical tensions and trade uncertainties, China’s M&A activity remained resilient, driven primarily by domestic transactions as companies pursued consolidation and expansion strategies within their home market.
Japan’s M&A market doubled in value to become the third-largest globally in 2025, while also experiencing a double-digit rise in the number of deals. This explosive growth to $232 billion represents a fundamental transformation of Japan’s corporate landscape, with private equity firms not just participating but leading changes in how Japanese corporations approach capital allocation, operational efficiency, and shareholder value.
Japan’s M&A surge stems from several converging factors: corporate governance reforms encouraged by the Tokyo Stock Exchange, demographic pressures driving companies to seek growth through acquisitions, and increased participation by foreign private equity firms seeking undervalued opportunities. According to Bloomberg data, the value of M&A deals involving Japanese companies rose 44% in 2024 to more than $230 billion, with momentum continuing into 2025.
Bain Capital’s recent announcement of the acquisition of 300-year-old Tanabe Pharma for $3.4 billion represented the largest private equity deal ever announced in the Japanese healthcare sector. The weak yen, while making overseas investments more expensive for Japanese acquirers, has made Japanese companies attractive targets for international buyers, particularly as global players view these firms as undervalued with significant strategic value.
Europe, the Middle East, and Africa also experienced strong M&A value growth, boosted by megadeal activity. However, the region’s overall deal count contracted by 7%, indicating a more selective and cautious market where larger, strategic transactions dominated over smaller deals. This pattern suggests that while confidence has returned for transformational transactions, acquirers in the region remain discerning in their approach.
Broad-Based Participation Across Dealmaker Categories
Against the backdrop of the overall 36% rise in deal value expected for 2025, activity among all classes of dealmakers was sharply higher. Strategic transactions saw deal value increase by 38%, while financial investors experienced growth of 31%, and venture capital players recorded gains of 28%. This broad-based participation demonstrates that the M&A rebound was not confined to a single category of buyers but reflected widespread recognition of dealmaking opportunities across the investment spectrum.
Private equity remains a major player, accounting for more than $17 billion in deal value in Q1 2025 alone. Financial sponsors have focused particularly on software take-privates, aiming to unlock growth and enhance efficiency in traditional software businesses as they adapt to the AI era. Unrealized value in PE portfolios has reached record highs, creating substantial dry powder that positions private equity firms to continue aggressive deal activity.
According to PwC’s analysis, through September 2025, there were 144 large deals worth between $1 billion and $5 billion and 47 megadeals over $5 billion. If this pace continues, 2025 would finish with 17% more large deals and 31% more megadeals than 2024, making it the strongest year for large deals by volume since 2021 and the second strongest year in history.
The Historic Shift from Scale to Scope Deals
One of 2025’s most significant strategic trends has been the dramatic swing toward scope deals—acquisitions made by companies seeking to expand into new markets and customer segments—rather than scale deals focused on growing existing activities and markets. Bain’s analysis reveals that 60% of 2025 deals valued at more than $1 billion were scope deals, representing the highest rate ever recorded and marking a fundamental shift in M&A strategy.
Understanding the distinction between scope and scale deals is crucial for evaluating current M&A trends. Scale deals involve high business overlap between target and acquirer, fueling expansion in existing businesses and historically putting cost synergies at the top of the deal thesis. The goal is to achieve greater market presence and economies of scale. In contrast, scope deals involve targets that are related but distinct businesses, enabling acquirers to enter new markets, product lines, or channels, with growth typically at the top of the deal thesis through access to new and faster-growing markets.
The financial services and advanced manufacturing sectors, both traditionally focused on scale deals, are among industries revealing a heightened appetite for extending their scope. This shift reflects companies’ focus on topline growth and adding new capabilities rather than primarily pursuing cost efficiencies through consolidation. In the technology sector specifically, scope deals have accounted for nearly 80% of all tech industry M&A over the past six years, driven partly by increased regulatory scrutiny of large-scale consolidation deals.
The pivot toward scope deals comes with different risk and reward profiles compared to scale acquisitions. While scale deals succeed based on rapid overall integration, capture of cost synergies, and full cultural integration, scope deals require more nuanced approaches that balance the need to preserve acquired capabilities while achieving integration benefits. Unlike scale deals, which are primarily predicated on generating cost synergies, scope deals are heavily based on revenue synergies, with companies planning to grow revenues first by cross-selling and longer term by bringing products together.
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Key Factors Driving the M&A Rebound
Multiple converging factors have driven 2025’s new wave of M&A activity as companies decided to buy to grow and respond to changing profit pools. Many of the headwinds that constrained M&A during the post-pandemic years have calmed, creating more favorable conditions for dealmaking.
Regulatory environments have eased in many jurisdictions, reducing one significant barrier to transaction completion. The cost of capital has moderated from the elevated levels seen in 2022 and 2023, making financing more accessible and improving deal economics. The buyer-seller valuation gap, which had widened substantially during the post-pandemic period, has narrowed considerably, with valuations rising to 11.6x EV/EBITDA but remaining below 2021 peak levels in most industries. This compression of the valuation gap has made it easier for buyers and sellers to reach agreement on transaction terms.
Executives increasingly realized that waiting for perfect conditions made less sense against the current strategic backdrop, particularly given the pace of technological change and competitive pressures. The urgency to acquire AI capabilities, access new markets, and respond to shifting industry dynamics drove companies to move forward with transactions rather than remain on the sidelines.
The reopening of IPO markets in 2025 also contributed to improved M&A conditions by providing liquidity for strategic buyers and creating exit pathways for financial sponsors. Companies including Pattern, Fermi, StubHub, Circle, Klarna, Figma, Navan, and Gemini all debuted in public markets during 2025, demonstrating selective but real investor appetite for technology companies with strong growth prospects.
Trade Policy and Post-Globalization Impacts
Uncertainties over tariffs and trade turbulence had a surprisingly muted impact on M&A activity in 2025. An early pullback in dealmaking in April proved to be short-lived, with momentum steadily building over subsequent months. The rate of cross-border deals did not change substantially in 2025, and fewer than half of M&A executives surveyed by Bain said trade restrictions would impact their overall deal plans, while 70% indicated that trade policy would not affect divestiture plans.
However, Bain’s analysis suggests that while post-globalization trends did not have a large impact on M&A in 2025, they will likely have bigger effects over time. Early hints are already visible: non-US companies are showing weaker appetite for US-based assets, while US buyers are becoming more likely to pursue domestic deals due to tariff considerations. As global trade patterns fragment along regional lines, M&A is increasingly providing companies with optionality and access to markets, with more arm’s-length moves between the world’s two biggest deal markets: the US and China.
Post-globalization and increased protectionist policies are also likely to impact capital allocation to M&A going forward. With companies confronting costs for building resiliency into supply chains and investing in AI capabilities, automation, and technology infrastructure, M&A executives will likely face greater scrutiny on capital allocations to dealmaking and potentially higher bars for deal return on investment.
Capital Allocation Challenges and Competing Priorities
Despite the strengthened dealmaking in 2025, capital allocations to M&A reached a 10-year low, accounting for just 7% of cash expenditures by almost 700 S&P World Index companies, compared to a range of 9% to 17% in the prior nine years. This decline reflects how other investment priorities are crowding out M&A, as companies invest heavily in technology stacks, robotics, AI infrastructure, factories, and energy facilities.
Among the biggest non-M&A capital allocations, the “Magnificent 7” technology companies combined to invest almost $500 billion in capital expenditure and research and development through the third quarter of 2025. The four largest hyperscalers—Amazon, Google, Microsoft, and Meta—saw total AI-related capex spending expected to total over $350 billion in 2025, illustrating how access to physical infrastructure is becoming as strategically important as model development itself.
These competing capital demands create tension in corporate finance departments as executives weigh investment in M&A against other strategic priorities. The challenge for dealmakers is demonstrating that acquisitions can deliver returns that justify capital deployment relative to organic investment opportunities, particularly given the transformational potential of AI and other emerging technologies.
AI’s Expanding Role Throughout the M&A Lifecycle
In a year marked by AI’s rampant advancement, artificial intelligence was visible everywhere in the dealmaking landscape—not just as a driver of transactions but as a tool transforming how M&A is conducted. Bain found that 75% of strategic acquirers have assessed the impact of AI on their target’s business during due diligence, while at least 20% had walked away from deals as a consequence of concerns about AI impacts.
The use of AI by M&A practitioners more than doubled to 45% in 2025. While deal sourcing and screening remain AI’s main applications in M&A, more dealmakers have begun relying on the technology for other functions such as planning and executing integrations. AI tools can substantially reduce the time spent on due diligence while increasing accuracy and uncovering insights human reviewers might miss, with AI systems able to process enormous amounts of data rapidly and dramatically shorten transaction timelines.
During the pre-deal phase, AI helps with target identification and initial screenings by scanning market data to identify potential acquisition targets that match specific criteria. In the execution stage, AI-powered document review speeds up due diligence by analyzing contracts and financial records. After mergers, AI assists with data integration and monitoring deal success, helping companies track whether anticipated synergies are being realized.
AI diligence is now essential at every stage of the deal lifecycle. Leading deal teams are using alternative data and advanced analytics to evaluate a target’s true market position and go-to-market fit, sharpening valuations and informing post-merger strategies. Buyers are increasingly demanding sophisticated diligence approaches and AI-driven value creation playbooks, moving beyond traditional, siloed diligence workstreams to integrate product, technology, and AI evaluations across all areas.
Industry-Specific Dynamics and Sector Trends
Beyond technology and advanced manufacturing, M&A activity in 2025 demonstrated distinct patterns across various industry sectors. In healthcare, reimbursement dynamics served as a major catalyst for dealmaking. As value-based care models evolved and government programs exerted more influence, providers and payers pursued acquisitions to scale, diversify revenue streams, and strengthen negotiating power. Health insurers actively pursued acquisitions expanding their care delivery, pharmacy, and technology platforms, aiming to build more integrated AI-based models.
In aerospace and defense, M&A volume rose 11% in the first half of 2025 as companies acquired AI-enabled defense systems, drone technologies, and mission-critical platforms. Industrial leaders used large-scale acquisitions to keep pace with AI developments, which have become central forces in automation, infrastructure, and supply chain transformation.
The pharmaceutical industry saw executives turning to M&A to define their futures less by size alone and more by identifying which parts of the value chain they truly needed to own to stay ahead. Oil and gas companies consolidated in record numbers, aiming to capture scale, cut unit costs, and further integrate value chains in response to declining oil prices and all-time high demand for natural gas. In banking, companies increasingly looked for deals with elements of both scale and scope—transactions offering efficiencies and cost synergies as well as benefits from complementary capabilities.
Consumer products companies took hard looks at their portfolios, divesting assets that didn’t fit desired strategies and growth profiles while acquiring capabilities in digital commerce and direct-to-consumer channels. This portfolio optimization reflected how companies across sectors used 2025 to reshape their businesses through strategic M&A, positioning themselves for success in rapidly evolving markets.
Cybersecurity M&A and Security Infrastructure
The explosive growth in cybersecurity M&A represented another significant dimension of 2025’s dealmaking activity. Strategic acquirers were highly active in adding innovative cybersecurity AI capabilities in Q4 2024 and Q1 2025, reflecting diverse arrays of security use cases. Venture funding for cybersecurity AI startups nearly tripled to $2.6 billion in 2024, up from $900 million in the prior year, with a similar number of deals continuing into 2025.
Palo Alto Networks’ pending acquisition of CyberArk, a leader in identity and privileged access management, reflects growing demand for vertically integrated security stacks. These deals demonstrate strategic pushes by both hyperscalers and pure-play security firms to build end-to-end defenses—especially in identity, access, and cloud workload protection—as enterprise customers seek consolidated, AI-ready platforms.
The US Department of Justice’s approval of Google’s acquisition of Wiz removed a key regulatory overhang and signaled a green light for platform-led rollups in cloud security. This regulatory clearance created momentum for additional security acquisitions as companies sought to build comprehensive security capabilities in an environment where AI-powered threats are becoming increasingly sophisticated.
Looking Ahead: Implications and Future Outlook
The 2025 M&A rebound carries important implications for dealmakers, corporate strategists, and investors as they look toward 2026 and beyond. The year demonstrated that when strategic imperatives align with favorable market conditions, companies will pursue transformational deals despite macroeconomic uncertainties and geopolitical tensions.
Bain & Company will release its full 2026 Global M&A Report in January, including comprehensive analysis of what to expect from dealmaking in the year ahead, deep dives on key industries, and full results of its M&A Practitioners 2026 Outlook Survey featuring perspectives from more than 300 M&A practitioners across 12 countries including the US, Australia, Brazil, Canada, France, Germany, Spain, India, Italy, Japan, Singapore, and the UK.
The lessons from 2025 are clear: successful M&A in the current environment requires sophisticated approaches that account for AI’s transformational impact, carefully balance scale and scope considerations, recognize competing demands on corporate capital, and execute with exceptional rigor given the high-stakes nature of many transactions. Companies that master these elements will be well-positioned to use M&A as a powerful tool for value creation and strategic transformation in an increasingly complex global business environment.
The critical question for 2026 is whether this momentum can be sustained. With substantial dry powder still available among financial investors, continued technological disruption driving strategic urgency, and improving economic conditions in many markets, the fundamentals appear supportive of continued robust M&A activity. However, potential headwinds including geopolitical tensions, regulatory evolution, and the ongoing recalibration of capital allocation priorities will require careful navigation.
As companies have learned through 2025’s dealmaking surge, success in M&A requires more than identifying attractive targets—it demands clear strategic vision, rigorous execution capabilities, and the organizational capacity to integrate acquisitions effectively while capturing intended value. The companies that excel in these dimensions will shape their industries’ competitive landscapes for years to come, using M&A as a catalyst for growth, innovation, and value creation in an era defined by rapid technological change and evolving market dynamics.
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By: Montel Kamau
Serrari Financial Analyst
19th December, 2025
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