Global mergers and acquisitions (M&A) are expected to slow down in 2025 due to rising geopolitical tensions and economic worries. A survey by Norton Rose Fulbright, conducted in early 2025, gathered insights from 200 senior executives involved in cross-border deals worth over $200 million.
Initially, more than half of the executives surveyed anticipated an increase in M&A activity compared to 2024. However, the introduction of new tariffs by the U.S. government in April changed the outlook significantly. Nearly 70% of respondents reported a decrease in their appetite for deals, largely due to the escalating trade tensions.
The survey highlighted several challenges affecting M&A feasibility. Executives pointed to ongoing supply chain issues, localized economic risks, and uncertainty in securing financing as major hurdles.
On a brighter note, technology, especially artificial intelligence (AI), is becoming increasingly important in M&A. The survey revealed that 51% of firms had already acquired AI-related businesses, and 46% planned to pursue such acquisitions soon. This marks a significant rise from the 33% recorded in 2024. Companies are using AI to enhance deal processes, including analysis and due diligence.
As traditional lending becomes more uncertain, many dealmakers are looking to alternative funding sources. About 35% of executives believe that securing financing for M&A will be more challenging in 2025. In response, private credit is gaining popularity, with 25% of executives seeing it as the most likely funding method for upcoming deals, particularly in unstable markets.
Private equity firms are also expected to be active buyers this year, according to 44% of survey respondents. Domestic private equity activity is likely to focus on South and Southeast Asia, while international firms are looking at opportunities in East Asia, Europe, and Oceania. This renewed interest suggests a level of confidence in certain regional markets despite overall volatility.
Additionally, the use of deal insurance is on the rise. Nearly two-thirds of executives anticipate increased reliance on representations and warranties insurance in 2025. This trend indicates that both buyers and sellers are increasingly using insurance products to manage risks associated with transactions.
In the Asia-Pacific region, however, the overall deal activity has seen a decline. Research from GlobalData shows a 2.6% drop in M&A activity in the first four months of 2025, largely due to an 8.2% decrease in venture capital funding. While mergers and acquisitions saw a slight increase of 2.4%, private equity activity rose by about 2%. Notably, China experienced a significant decline of over 15%, while India and Japan reported growth of 13% and 25%, respectively.
Overall, the landscape for mergers and acquisitions in 2025 is complex, with mixed signals emerging from different regions and sectors.