Understanding Global M&A Resilience

M&A Activity Surges Amid Policy Tailwinds and Economic Resilience: M&A activity is roaring back to life, fueled by a potent combination of resilient global growth, falling interest rates, deregulation, and greater clarity around tariffs and geopolitical risks. This new macro and policy backdrop has unleashed a fresh wave of corporate confidence, empowering CEOs and Boards to pursue bold, strategic combinations. Financing costs have declined meaningfully, with loan rates down 50 basis points in the U.S. and over 100 basis points in Europe in 2025, sharpening the math for LBOs. Meanwhile, deregulation has reduced political friction, increased certainty of regulatory approval, and accelerated deal timelines. In parallel, tariffs, once a cloud over global dealmaking, are now priced into when evaluating cross-border transactions for exporters and importers. Spin-offs are also on the rise as companies sharpen their strategic focus. U.S. spin-off volume doubled in Q2 2025, as firms seek to unlock value and shed non-core assets. The environment is now one of action, after a long period of hesitation. This resurgence comes at a critical juncture for Private Equity. With ~30,000 sponsor-owned portfolio companies globally, the industry has faced mounting exit pressure, especially for 2016–2021 vintage funds, which have reported ~20% lower DPI relative to prior funds. We are seeing green shoots with M&A up 20% and bankers on pace for their best year since 2021: IPOs, sponsor-to-sponsor deals, M&A exits, and dividend recaps are all re-accelerating. For credit investors, this is equally constructive, since ~50% of LBO capital structures are funded with debt, higher deal velocity directly supports origination pipelines. Sectors like technology, defense, energy, healthcare, transportation and business services are leading the rebound, offering rich pipelines for both equity and debt capital providers. Union Pacific-Norfolk Southern, Baker Hughes -> Chart Industries, Charter -> Cox, Alphabet -> Wiz are setting the tone, with significantly more to come as this momentum is highly likely to continue. Could it be that the best is yet to come?

My latest PitchBook analyst note, US VC-Backed M&A Outlook, has gone live. Key takeaways ➡️ Large M&A continues to be rare because of elevated interest rates, uncertain economic growth, increased regulatory scrutiny, and stock market volatility. Public companies have significantly pulled back from large acquisitions, with the number of active public acquirers dropping from a peak of 1,423 in 2021 to 815 in 2024. ➡️ While big-ticket deals remain limited, smaller acquisitions are experiencing relative growth. A confluence of factors—lower startup valuations, need for liquidity, and prolonged funding drought—have created favorable conditions for smaller-scale M&A. These deals are poised to maintain or slightly grow in the coming quarters. ➡️ With the number of private companies rising sharply and public market exit channels severely limited, M&A has become a critical path for exits. The median time since last funding round hit a record 2.4 years in Q1 2025, reflecting mounting pressure for liquidity. Founders and GPs are increasingly turning to M&A as a quicker, more viable liquidity solution compared to IPOs. ➡️ Antitrust concerns continue to be a hurdle, especially for Big Tech, under the Trump administration. Despite this, large deals such as Google’s $32 billion offer for Wiz signal hope that high-profile acquisitions are still possible. ➡️ Sectoral trends show divergence in M&A resilience. Software remains the dominant sector, comprising more than 40% of deal volume since 2015 and peaking at 51.2% in Q1 2025. Areas such as digital health and supply chain tech are more insulated from trade policy risks. ➡️ Buyouts, although traditionally a smaller share of VC exits, now outpace public listings. Interest is growing among PE firms seeking bolt-ons, especially in software, healthcare services, and commercial products. Check out the full note via link in comments. 🔗

The M&A and capital markets have demonstrated resilience in the first half of the year, navigating unexpected challenges and seizing new opportunities, even as the year unfolded differently than initially expected. Anu Aiyengar and the Global M&A and Advisory group has released its 2025 Global Mid-Year M&A Outlook, highlighting the key drivers of deal-making so far this year and what is likely to influence transactions in the latter half. Notable insights I gathered from the report include: ➡️ Market captured $2.2 trillion in deal volume in the first half of 2025, a 27% increase YoY in total global M&A volume 🚗 Mega deals, cross-border transactions, and strong activity across key industries and regionally in APAC were key drivers during the 1H 2025 ⏭️ Pent up demand from Sponsors and VC, the need for supply chains to evolve, increased activist appetite amid volatility and regional activity are key elements that will likely propel strategic dealmaking throughout the rest of 2025 Check out the full outlook report: https://bit.ly/3GWFzmg