PHOTO: TIMA MIROSHNICHENKO

After years of playing it safe, mergers and acquisitions (M&A) activity is finally gearing up for a revival. The latter half of 2024 saw a welcome uptick in deal volume, offering a glimpse of the dealmaking frenzy expected to unfold in 2025. Optimism is high, with forecasts predicting a 15% jump in global deal activity year-over-year. Corporate ambition, increased private equity sponsorship, and a boost in cross-border deals are the key drivers behind this expected surge. In the private equity space, there’s talk of record-high dry powder and pent-up demand for deals. 

It’s a world of opportunity, but with opportunity comes the need for the right strategies — especially when it comes to valuations. After all, plunging into a deal without determining the economic worth of a company or asset is foolish. As we roll into 2025, understanding the evolving M&A trends and refining the art of valuing companies will be more critical than ever.

The Optimistic Outlook for 2025

The M&A market has faced its fair share of turbulence. 2024 was a year dominated by the fallout of political upheavals, shifting central bank policies, and an inflationary hangover. However, dealmakers now find themselves in a uniquely promising position. Inflation is finally on the decline, interest rates have shown signs of stabilizing, and the market is recovering — especially valuations. Dealmaking activity is already seeing a boost, with global M&A transactions for deals above $100 million increasing by 15% compared to the previous year, with large transactions (those between $1 billion and $10 billion) up 36% in the second half of 2024 alone. As we look to 2025, the stars seem to be aligning for a continued surge.

A key theme in the dealmaking world is the resurgence of corporate confidence, particularly in North America and Europe. BCG’s M&A Sentiment Index, which tracks dealmakers’ confidence in the market, has steadily risen, with North America showing the most optimism. Increased regulatory clarity and the potential for a friendlier pro-growth environment have set the stage for larger transactions in these regions. Notably, sectors like technology — especially in AI and semiconductors — are seeing a wave of activity, signaling the broader trend of innovation-driven deals. The Synopsys-Ansys deal is a prime example of what’s to come as big players position themselves for the next era of tech dominance.

Europe is also picking up momentum, with key sectors like financial services, asset management, and wealth management standing at the forefront. The potential merger between UniCredit and Commerzbank, or BBVA’s interest in Banco Sabadell, illustrates the growing confidence in the European banking sector, one that is primed for consolidation and transformation.

Diverging Paths of Global M&A Sentiment

While the global outlook is generally positive, regional variations are still pronounced. North America and Europe are riding high on the waves of optimism, while Asia-Pacific lags behind. The Asia-Pacific market, often seen as a growth engine for global M&A, remains in a state of uncertainty, with political and economic factors weighing on confidence. In China, fiscal stimulus efforts could eventually spur activity, but this is tempered by regulatory complexities and international tensions. Meanwhile, Japan’s corporate governance reforms are slowly encouraging deals, particularly in the tech sector, while Australia anticipates a flurry of M&A activity ahead of new competition laws set to take effect in 2026.

Despite the slower pace in some parts of the world, certain sectors — like data centers in Asia — are experiencing record-breaking M&A activity. In 2024 alone, data center deals reached $57 billion, nearly doubling the volume seen in 2023. The sector’s boom is driven by the need for more infrastructure to support the surge in cloud computing, data storage, and AI technologies. The impressive growth of Vantage Data Centers and its $9.2 billion equity raise serves as a bellwether for future M&A trends, both in Asia-Pacific and globally.

The Crucial Role of Valuations in Success

As M&A activity ramps up in 2025, the importance of valuations cannot be overstated. Dealmakers may be feeling the pull of a rising market, but it’s critical that they approach valuations with rigor and caution. Market volatility, economic policy uncertainty, and shifting investor sentiment can make valuations tricky, and it’s easy to get caught up in the optimism surrounding potential deals. Yet, valuations remain a key determinant of deal success — both in terms of deal structure and post-transaction performance.

According to research from Synergy Research Group, valuations in the data center space saw significant variation in 2024, driven in part by changes in investor sentiment and market conditions. For instance, although some deals in the sector commanded eye-watering premiums, others were considerably more modest in their pricing. The takeaway? A strong grasp of valuation fundamentals. 

While enthusiasm is high for larger deals, private equity investors and corporate acquirers must factor in macroeconomic trends such as interest rates, inflation, and geopolitical volatility. Whether an investor is acquiring a legacy brand, expanding into new markets, or diving into the tech sector, the underlying value of a target company will always remain central to the deal’s long-term success.

The key to success will be leveraging the right tools to ensure valuations are comprehensive and reflect both short-term market conditions and long-term growth potential. Advanced data analytics, robust financial modeling, and the integration of market intelligence are becoming indispensable in an era of more complex, cross-border deals.

Do You Have the Right Tools?

As we approach 2025, the M&A market is poised for a major resurgence. With increased optimism across key regions, a focus on high-growth sectors like technology, and greater activity from both corporate acquirers and private equity sponsors, the year ahead could usher in a new wave of dealmaking. However, as with any high-stakes game, success will hinge on precision — and that precision starts with valuations.

Cyndx’s AI-powered business valuation tool, Valer, empowers dealmakers to make smarter, more informed M&A decisions. By leveraging advanced AI and data analytics, Valer streamlines the search for potential targets or acquirers, offering deep insights into valuations, financial performance, and market trends. The platform’s database allows users to quickly assess companies’ worth before moving forward in a deal or deciding on the next steps. 

While it’s tempting to jump headfirst into a hot market, the dealmakers who take the time to properly assess the true worth of a company, accounting for both macroeconomic factors and sector-specific dynamics, will come out ahead. 

With M&A deals surging forward at breakneck speed, those who can balance ambition with caution — and possess the right tools — will lead the charge into 2025. Contact us now to get an edge on your deals.