KPMG 2025 M&A Deal Market Study
A KPMG survey of 300 M&A dealmakers reveals key trends, challenges, and opportunities shaping future M&A amid AI and economic shifts.
The merger and acquisition (M&A) market has faced its share of challenges in recent years, but the M&A deal market study in December suggested that dealmakers were optimistic about the future. The survey, which polled 300 US M&A professionals, revealed that the rapid emergence of Generative AI (31 percent), high interest rates (28 percent), and inflationary pressures (28 percent) were among the top market conditions impacting the desire to buy or sell businesses. Despite these factors, the study indicated that M&A remains a key strategy for companies looking to drive growth and expand into new markets.
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The changing face of M&A: Drivers and trends
Drivers of Deal Activity (Asked of those more active than in 2023; n=248)
Notably, the growth of the core business emerges as a key driver for deal activity, with 38 percent of corporates and 29 percent of private equity (PE) firms citing it as a primary reason for their heightened interest in M&A. This underscores the strategic importance of M&A in driving business expansion and achieving growth objectives.
Overcoming obstacles and embracing opportunities
Top Challenges to Closing Recent Deals (Multi-select)
While the M&A market presents a plethora of opportunities, it is not without its challenges. The study identifies agreeing on valuation (44 percent), completing due diligence (41 percent), and navigating regulatory hurdles (41 percent) as the top obstacles in closing deals. These findings emphasize the importance of having a robust M&A strategy and a comprehensive understanding of market dynamics to successfully navigate these challenges.
Moreover, this study highlights how the current economic climate affects deal closures with increased financing challenges (53 percent), preference for lower-risk deals (52 percent), and pressure to renegotiate terms (49 percent). Despite these obstacles, 78 percent of dealmakers planned to complete at least one transaction in 2025, and 72 percent aimed for their next deal before mid-2025.
The rise of PE in M&A
PE firms demonstrate increased deal activity and larger transaction sizes
In 2024, 58 percent of corporates and 44 percent of PE firms reported being more active in dealmaking compared to 2023. This trend is further underscored by the fact that PE firms are undertaking larger transactions, with 27 percent of their deals exceeding $1 billion, compared to 17 percent of corporate deals.
The outlook for 2025 showed PE firms continuing to want to lead M&A activities, with larger deals expected. Around 80 percent of PE transactions were projected to exceed $500 million, compared to 66 percent of corporate deals. With 80 percent of PE firms ready to invest in 2025, significant M&A activity was anticipated.
The interplay of AI, elections, and M&A
Two critical factors will shape future dealmaking: GenAI and the 2024 US elections. The survey revealed that 77 percent of respondents are already using AI in their M&A processes, while an additional 19 percent plan to leverage AI soon. Key areas of application include value creation for acquisition targets (71 percent), integration/separation execution (66 percent), and search and screen (62 percent). This highlights the growing importance of technology in M&A success.
Additionally, the 2024 US elections were expected to significantly impact M&A activity, with 76 percent of respondents anticipating increased dealmaking afterwards. Corporates (80 percent) were more optimistic about the elections' impact compared to PE firms.
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