What’s Driving M&A Confidence Right Now

As we settle into 2025, the M&A market shows clear signs of renewed confidence. Following a period of economic uncertainty, buyers and investors are actively deploying capital, prioritizing AI-driven transformation, and pursuing deals that have the potential to reshape industries.

Our latest Equiteq Global Buyers Report 2025 reveals that 80% of respondents expect capital availability to remain stable or increase this year, underlining the pent-up demand for strategic acquisitions. With stabilising interest rates and a more positive economic outlook in key markets, M&A activity is poised to accelerate.

So, where are buyers focusing their attention, and what does this mean for firms looking to capitalize on current market trends?

Confidence Returns as Buyers Look to Deploy Capital

In 2024, the M&A landscape was shaped by macroeconomic headwinds, fluctuating valuations, and cautious deal-making. However, our research indicates that confidence is bouncing back:

• Nearly 90% of private equity buyers expect to increase deal activity in 2025, driven by record levels of dry powder and pressure to deploy capital (see report, page 14).
• North America remains the dominant market for M&A, with over 80% of buyers rating it a “high” or “very high” priority. However, Europe and the UK remain resilient, despite ongoing economic challenges (page 18).
• Financial services, healthcare, and government services are the top three sectors of interest, reflecting the growing need for business resilience, compliance expertise, and digital transformation (page 17).
  

Key Takeaway: Buyers are actively targeting high-growth, scalable businesses
With confidence returning and capital ready to be deployed, firms that demonstrate growth potential and operational readiness are more likely to attract strategic and private equity interest.

Now is the time to refine your value story.

AI-Readiness and Digital Transformation Drive M&A Demand

Beyond sector trends, AI and digital transformation are reshaping buyers' priorities. As businesses race to integrate AI into their operations, firms that offer AI-driven solutions, data analytics, and automation capabilities are attracting strong interest.

According to our research:

• 76% of strategic acquirers cite service and experience enhancement as the primary driver for AI acquisitions (page 5).
• 71% of buyers see AI as a tool for differentiation, reflecting a growing need for competitive advantage (page 5).
• Predictive analytics (64%), natural language processing (44%), and machine learning (33%) are the most sought-after AI technologies for M&A (page 7).

At the same time, enterprise SaaS, cybersecurity, and cloud transformation continue to be strong acquisition drivers. Our findings show that Salesforce (76%), Microsoft (67%), and Oracle (56%) are the most in-demand SaaS ecosystems for M&A (page 27).

Key Takeaway: AI readiness is becoming a core value driver in M&A. Buyers are prioritizing firms with clear AI capabilities, from predictive analytics to machine learning and automation. Businesses that can demonstrate AI-driven differentiation and scalable tech solutions are more likely to stand out in today’s competitive deal landscape.

What This Means for Deal Structures in 2025

As M&A activity gains momentum, deal structures continue to balance upfront value realization with risk mitigation.

• 57% of deals involve upfront cash, while 31% include deferred earnouts (page 39).
• Valuation multiples remain strong, with firms growing at 10-20% achieving 9-10x EBITDA, while high-growth businesses (30%+) are still commanding 11-12.6x EBITDA (page 39).
• Private equity investors are increasing their use of equity components to bridge valuation gaps and de-risk transactions (page 38).

Key Takeaway: Deal structures remain disciplined, with value tied to performance. Buyers are willing to pay strong multiples, but are increasingly using earnouts and equity to manage risk. For sellers, solid financials, apparent growth, and strong leadership are key to securing premium outcomes.

Looking Ahead

With dealmakers increasingly confident about the year ahead, 2025 is shaping up to be a pivotal year for M&A. Buyers are entering the market with strong capital positions, clear acquisition strategies, and an appetite for high-value opportunities.

At Equiteq, we continue to track these trends closely and work with clients to unlock value, align with the right investors, and navigate a dynamic deal-making landscape.

Download the full Equiteq Global Buyers Report 2025 for a deeper dive into the market outlook and sector-specific insights.