Global mergers and acquisitions (M\&A) activity gathered remarkable momentum in the first half of the year, propelled by a confluence of market factors that encouraged dealmakers to pursue transactions of unprecedented scale. Total deal value reached approximately $2.14 trillion globally—up more than 25 percent year‑on‑year—despite a modest decline in overall transaction count. A wave of megadeals, resilient financing conditions, sector‑specific catalysts and renewed confidence among corporate and private equity buyers all combined to reshape the M\&A landscape through June.

Robust Liquidity and Falling Volatility Unlock Mega‑Transactions

After enduring bouts of market turbulence tied to trade tensions and monetary tightening, dealmakers found renewed encouragement in steadily improving liquidity conditions and a pronounced drop in volatility indices. With the VIX settling near multi‑month lows and key equity benchmarks such as the S\&P 500 and Nasdaq hitting fresh record highs, corporate treasuries and private equity funds grew more comfortable underwriting large‐ticket deals. Investment banks reported a 62 percent rise in transactions valued at $10 billion or more compared to the same period last year, and 36 so‑called megadeals were signed by late June versus 31 a year earlier. Notable transactions included a $33 billion supplier buyout by a major automotive group in Asia and a $24 billion cross‑border acquisition by a leading payments processor, underscoring how ample capital and buoyant equity markets underpinned bold strategic moves.

The private equity community emerged as a powerful force behind the first‑half surge, deploying record levels of “dry powder” accumulated during extended fundraising cycles. Low financing costs—supported by central bank assurances of a gradual approach to rate cuts—and investor demand for yield in a subdued bond environment encouraged sponsor‑backed buyouts and carve‑outs across technology, healthcare and energy transition sectors. In technology, a drive to consolidate capabilities around artificial intelligence and cloud services fueled deals even as volume in the sector dipped modestly; total tech deal value climbed by double digits year‑on‑year despite headwinds. Meanwhile, the global push toward sustainability and decarbonization unlocked opportunities in renewables infrastructure, green hydrogen and electric‑vehicle supply chains. Combined, these thematic drivers attracted both strategic acquirers and financial sponsors eager to capture long‑term growth trajectories.

Cross‑Border Flows Rebalance Towards Asia and Europe

A notable feature of the year’s early activity was the reorientation of deal flows toward Asia‑Pacific and Europe, as buyers in those regions capitalized on domestic stimulus packages and infrastructure spending. Asia’s M\&A value more than doubled to nearly $584 billion in the period—a surge led by dealmaking in Japan, China and fast‑growing Southeast Asian economies—and accounted for over a quarter of global activity. The European Union, propelled by coordinated recovery funds and green transition initiatives, also saw strong inbound investment, with equity funds attracting three times the capital compared to the same period last year. North America remained the largest regional M\&A hub at just over $1 trillion in deal value, but domestic dealmakers increasingly looked to cross‑border targets in Europe and Asia to diversify growth and mitigate local market saturation.

In several key jurisdictions, regulators signaled a more accommodative stance toward large M\&A transactions, alleviating one of the principal concerns that had stalled deals earlier in the tightening cycle. U.S. antitrust authorities, after intensifying scrutiny of tech‑sector consolidations in 2024, began to streamline review processes for transactions outside narrowly defined competitive risk areas. Similarly, the European Commission reaffirmed its commitment to timely approvals for infrastructure and energy deals that align with the bloc’s strategic autonomy goals. This softer regulatory posture—coupled with clearer guidance on national security considerations in cross‑border transactions—helped revive negotiations on blockbuster mergers that traders had put on hold.

Revival of IPO Pipelines Adds Confidence to Dealmakers

A complementary trend boosting M\&A sentiment was the gradual revival of initial public offering (IPO) pipelines. After a protracted lull, scores of companies that postponed listing plans in late 2024 took advantage of stabilized equity markets to file registration statements, signaling that capital markets could absorb sizeable new issuances. The resurgence of IPOs not only provided exit pathways for private equity investors and corporate spin‑offs, but also reinforced the broader narrative that financial markets were once again functioning smoothly. Deal teams leveraged this backdrop to structure more complex, dual‑track processes where companies weigh both sale and listing options, further expanding strategic choice.

Beyond cyclical market drivers, geopolitical considerations played a decisive role in shaping deal activity. Heightened focus on supply‑chain resilience prompted industrial conglomerates and sovereign investors to consolidate critical sectors such as semiconductors, defense manufacturing and food security. A flurry of high‑profile deals in these areas reflected a desire to internalize key inputs and reduce exposure to trade disruptions. At the same time, regional trade agreements and bilateral investment treaties provided fresh frameworks for cross‑border cooperation, encouraging acquirers to target assets in partner markets with favorable access and legal protections.

Technology and Innovation Battles Intensify M\&A Competition

Competition among technology giants also fueled acquisitions aimed at shoring up R\&D capabilities and customer ecosystems. Companies across software, cybersecurity and digital services sectors moved decisively to acquire niche innovators and secure talent, often paying premium multiples to thwart rival bidders. Venture capital trends further catalyzed these moves: as late‑stage startups faced pressure to meet performance milestones, strategic buyers stepped in to negotiate pre‑emptive buys, accelerating deal flow in the $1 billion‑plus segment.

With half of 2025 behind them, bankers and dealmakers express strong optimism that the momentum will carry into the second half. Deferred transactions—ranging from planned spin‑outs to cross‑industry mergers—are positioned to close once final approvals and financing structures are in place. Moreover, forward‑looking indicators such as sustained low bond yields, ample covenant‑lite lending capacity and a healthy corporate cash buffer suggest that the market can sustain large transactions without undue strain. As momentum builds on these multiple fronts, the global M\&A market appears poised for an even more impactful second half, potentially eclipsing early‑year highs as strategic ambitions align with favorable financing and regulatory conditions.

(Adapted from Reuters.com)