Q2 2025 M&A Trends: Fewer Deals, Higher Stakes

Market Overview: Volume, Valuations & Drivers

Global M&A activity in Q2 2025 reflected a notable dislocation between deal volume and value. Deal volumes declined 17% versus Q2 2024, hitting their lowest level since 2015 (excluding 2020), with only ~10,900 deals announced. Yet aggregate deal value rose by roughly 30%, closing the quarter at approximately $969 billion. This bifurcation underscores a market increasingly defined by high-conviction, high-value transactions – particularly in the large-cap and strategic segments.

Valuations reflected shifting global dynamics. U.S. deal multiples climbed through H1 2025, while valuation levels in Europe and APAC declined. Large-cap transactions ({'>'}$1 billion) were priced around 37% below their 2021 peaks, continuing a multi-year correction that has narrowed the gap with mid-market deal multiples. This reset is enhancing the relative attractiveness of large-scale deals, particularly for buyers seeking scale and synergy in a more price-sensitive environment.

Several dealmaking tailwinds have re-emerged. Confidence is gradually returning post-pandemic, with both corporates and PE sponsors showing renewed strategic urgency – particularly around digital capabilities, ESG integration, and operational resilience. Capital availability remains supportive, especially within private equity, where dry powder, improving credit conditions, and increased GP-led and secondary activity are helping to drive selective deal flow.

These market dynamics have played out differently across buyer types, with distinct patterns emerging among strategic and financial acquirers.

Strategic vs. Financial Buyers

Corporate buyers continued to pursue bold, transformative acquisitions in Q2 2025, targeting consolidation and scale in sectors with high fixed costs and strategic overlap. Notable megadeals included Charter Communications’ $34.5 billion acquisition of Cox and Constellation Energy’s $26.6 billion takeover of Calpine – both emblematic of moves to strengthen core positioning in utilities, telecommunications, and energy. For many corporates, M&A remains a key lever to accelerate capability expansion in a cost-sensitive environment.

Private equity firms, meanwhile, navigated persistent headwinds – higher financing costs, muted exit activity, and over $1 trillion in dry powder awaiting deployment. Still, confidence is returning at the top end of the market. Large-scale buyouts are proceeding, often structured with more equity as lenders remain selective. GP-led and LP-secondary transactions are increasingly used to unlock liquidity and deploy capital. Notably, credit conditions have improved since 2024, with new-issue loan volumes more than doubling year-over-year – providing additional flexibility for well-capitalized sponsors.

Beneath the headline figures, sectoral and geographic trends provide further insight into what – and where – buyers are targeting.

Sector Trends & Cross-Border Highlights

Sector momentum in Q2 2025 was driven by high-value activity in infrastructure-intensive and future-oriented industries. AI infrastructure, data centres, defence, and climate-tech emerged as standout sectors, reflecting a clear investor preference for scalable, resilient, and strategically essential assets. In the U.S., media and entertainment deals spiked to $39 billion in May alone, while the power and utilities sector recorded $28 billion in deal value. Private equity interest remained strong across asset-light, services-focused verticals, particularly where recurring revenue and defensible margins support long-term value creation.

Cross-border activity showed a clear geographic shift. The Americas accounted for approximately 61% of global deal value, with intra-regional U.S. activity rising nearly 16% quarter-over-quarter. APAC-based buyers doubled their investment into the Americas, underscoring the region’s relative economic stability and asset availability. While geopolitical tensions – ranging from tariff uncertainty to Middle East conflicts – weighed on some cross-border flows, large consortium-led deals such as the Santos acquisition progressed nonetheless, reflecting sustained appetite for scale and diversification in select markets.

H2 2025 Outlook: What to Watch

The second half of 2025 is shaping up to be a period of cautious optimism, with both strategic and financial buyers closely monitoring pricing dynamics, capital markets, and geopolitical signals.

Deal structuring is expected to remain adaptive. Earn-outs, seller financing, and multi-scenario modeling will continue to be used to bridge valuation gaps and manage volatility. Flexibility in terms and a greater reliance on contingent consideration structures will be key in competitive or uncertain situations.

Strategic discipline will be critical. Corporates and PE firms aiming to secure high-quality assets are increasingly focused on proprietary deal flow, off-market opportunities, and digital-first diligence processes. Speed, preparedness, and certainty of execution will remain competitive differentiators, particularly in tight processes.

Recovery signals are emerging but not yet fully formed. A clearer trajectory for interest rates, more stable tariff policy, and improving capital market conditions could unlock pent-up deal activity. PE fundraising declined ~13% in H1 2025, yet signs of a rebound in Q2 point to underlying resilience. Corporate M&A is expected to remain steady, while PE activity could return to pre-2018 levels if market conditions stabilize.