In an environment marked by structural shifts, macroeconomic uncertainty, and sectoral realignment, M&A dealmaking continues – but at a different rhythm.
As we review the first half of 2025, both global and regional deal data suggest that selectivity, strategic focus, and sector resilience have become the defining characteristics of today’s market. Amid such complex and sometimes contradictory market trends, what's the best course of action to follow?
Global M&A Market in H1 2025: Declining Volumes Amid Shifting Dynamics, and a Focus on Resilience
In the first half of 2025, the global M&A market experienced a continued decline in deal volumes, registering a 9% drop compared to the same period in 2024. Despite this decrease in the number of transactions, overall deal values increased by 15%, reflecting a market environment where investors are prioritizing quality over quantity. Activity has been concentrated among companies with a strong local presence, particularly those operating within national borders or in sectors less vulnerable to tariff pressures, such as services. Businesses with solid cash flow and positive outlooks remain in demand and continue to attract buyers across regions and industries. Conversely, companies that do not exhibit these strengths are facing a more challenging market. In the United States, for example, a May 2025 PwC Pulse Survey indicated that 30% of companies had paused or revisited deals due to ongoing tariff uncertainty. As a result, dealmakers are expected to navigate a cautious and highly selective environment in the coming months. Against this backdrop, private equity (PE) and principal investors continue to play a pivotal role, adapting strategies to navigate a more selective and competitive environment. Some of the largest PE funds are making use of the uncertain US environment to expand internationally, including in Europe, as well as to plug vulnerabilities and reduce pressure points in their own operations and those of their portfolio companies. That includes ensuring they are in a better position to deal with macroeconomic and geopolitical uncertainty, including supply chain risks and complications relating to potential tariffs. Sovereign wealth funds have also stepped up their activity in Europe and elsewhere. Private equity remains an engine for dealmaking – but it must adapt to a new environment: costlier capital, tougher exits, and an AI revolution that brings both opportunity and change.
DACH Market Overview: A Year of Contrasts and Cautious Optimism
The DACH region (Germany, Austria, Switzerland) has mirrored global trends, with a strong rebound in M&A activity in late 2024 followed by a more measured pace in H1 2025. Deal volume in the region reached 1,447 transactions in H1 2025 – up 15.5% from H1 2024, though down 21.8% from the peak in H2 2024. Total deal value moderated to €83.6 billion, a 10.9% decline from the previous half-year, but the average deal size increased to €202 million, reflecting a shift toward larger, more strategic transactions.
Germany remains the powerhouse of the DACH M&A market, leading in both deal volume and value. The country’s outlook is buoyed by declining ECB interest rates and the rollout of a €500 billion government-backed infrastructure and climate fund, which is expected to further stimulate activity in energy, construction, and utilities.
Sector Shifts: From Industrial Dominance to Diversification
The sector landscape in DACH is evolving rapidly. While Industrial Manufacturing and Automotive (IM&A) has traditionally been a key driver of deal value, its share dropped from 35% in H2 2024 to 18% in H1 2025. This decline is partly due to concerns over potential US tariffs impacting export-reliant German industries such as chemicals, metals, machinery, and autos.
In contrast, Technology, Media, and Telecommunications (TMT) has consistently led in deal volume, accounting for approximately 30% of all transactions in the last twelve months. The sector’s appeal is driven by its growth potential and the strategic imperative for companies to acquire tech-driven capabilities, streamline operations, and strengthen internal M&A functions.
Financial Services emerged as the top contributor to total deal value in H1 2025, propelled by landmark transactions such as Helvetia’s €9.4 billion acquisition of Baloise and PAI Partners’ €3.5 billion acquisition of Viridium. These high-value deals underscore the sector’s resilience and attractiveness to both strategic and financial investors.
Deal Size and Structure: The Rise of Mega Deals
A defining feature of the DACH M&A market in H1 2025 is the prevalence of mega deals (≥ €1 billion). The number of such transactions remained elevated at 21, reflecting a growing appetite for transformational acquisitions and strategic consolidation. Large deals (€250 million–€1 billion) also maintained a strong presence, with 44 transactions in H1 2025.
Conversely, the proportion of small (< €50 million) and medium-sized (€50 million–€250 million) deals has declined, with the combined number falling from 426 in H1 2024 to 347 in H1 2025. This trend highlights a cooling appetite for smaller-scale transactions, likely influenced by ongoing macroeconomic uncertainty and geopolitical risks, which disproportionately affect smaller, more vulnerable companies.
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M&A Deals Insights: H1 2020 – H1 2025
Private Equity & Principal Investors: Adapting to a New Reality
Private equity and principal investors remain central to the DACH M&A landscape, though their strategies are evolving in response to market conditions. Financial investors accounted for 45% of deal activity in H1 2025, down from 53% in H1 2024, as PE activity slowed amid limited exit opportunities and persistent economic uncertainty.
Despite this, leading PE firms such as HV Capital, Ufenau Capital Partners, and Waterland Private Equity continue to drive deal flow, with High-Tech Gründerfonds playing a key role in early-stage tech investments. Strategic investors, including Platform Group and Ahorn AG, have gained ground, leveraging cash reserves and operational synergies in a high-cost environment.
Valuation multiples, which rebounded in H2 2024 (mean: 14.6x EV/EBITDA, median: 10.9x), have come under renewed pressure in 2025, falling to a mean of 8.7x and a median of 7.3x. This reflects ongoing economic uncertainty, heightened concerns about tariffs, and persistently high financing costs. As interest rates stabilize, financial investors may find debt capital more accessible, potentially reigniting dealmaking and exit activity in the coming quarters.
Europe continues to draw investor interest, driven by relatively lower valuations compared with the US and new opportunities arising from increased government spending commitments in key countries, particularly in defence and infrastructure. Among other PE examples, Blackstone Group has said it is expecting to invest at least $500bn in Europe in the coming decade and is looking for opportunities to become a major lender to companies across the continent and strike large infrastructure deals and takeovers.
Key Deals and Investor Activity: Spotlight on H1 2025
The top deals in the DACH region during H1 2025 highlight the continued dominance of financial and consumer sectors. Notable transactions include:
- Helvetia’s €9.4 billion acquisition of Baloise Holding (Financial Services)
- Bain Capital and Mubadala’s acquisition of Apleona Group (€3.8 billion, Real Estate)
- PAI Partners’ €3.5 billion acquisition of Viridium (Financial Services)
- EP Global Commerce’s €4.0 billion investment in Metro AG (Consumer Markets)
- PAI Partners’ €3.5 billion acquisition of Motel One (Consumer Markets)
These deals underscore the strategic focus on stable, cash-generating sectors and the continued appetite for large-scale, transformational transactions.
Global Context: Private Equity’s Strategic Evolution
Globally, private equity is navigating a landscape marked by high competition for quality assets, increased scrutiny on value creation, and a growing emphasis on operational improvement. The pressure to deploy record levels of dry powder is intensifying, particularly in resilient sectors such as healthcare, technology, and business services. PE funds are increasingly focused on buy-and-build strategies, digital transformation, and ESG integration to drive long-term value.
In the DACH region, these global themes are playing out in real time. PE investors are recalibrating their approaches, prioritizing platform investments, bolt-on acquisitions, and sector specialization. The need to deliver returns and exit long-held assets is expected to drive renewed activity, especially as market conditions improve and strategic buyers return to the fray.
Another big theme for both PE and principal investors is the continued growth of private credit. Some of the largest PE players have been developing their capabilities over the past few years and making strategic acquisitions along the way. Private credit is evolving and increasingly being used not only as an alternative to leveraged bank lending but also more widely as a structured debt instrument.
Private credit has grown rapidly over the past 15 years, now managing nearly $2 trillion in assets and rivaling traditional bank lending, with investor demand remaining strong. The market is evolving beyond direct lending into more complex, tailored financing solutions across the debt value chain, including structured capital investments like Carlyle’s $1.3bn deal with Trucordia and KKR’s $600m injection into Manipal Group. Lenders benefit from regulatory flexibility, enabling them to target higher returns through riskier structures, while borrowers gain faster, more customized, and non-dilutive financing options. However, the sector's fast expansion is drawing regulatory scrutiny, as concerns mount over how these funds will perform during economic stress or downturns.
Looking Ahead: Opportunities and Challenges
The DACH region remains one of the most resilient and strategically relevant M&A markets globally. PE funds are evolving from opportunistic buyers to value creators with deep sector focus, platform strategies, and bolt-on ambitions.
As interest rates normalize and fiscal stimuli take hold, we expect deal activity to remain healthy, albeit with continued scrutiny and strategic intent. Global players will continue to look to DACH for value-rich, stable investment opportunities, especially as geopolitical and economic uncertainties persist elsewhere.
For private equity and principal investors, the challenge will be to balance caution with agility – deploying capital strategically, driving operational improvements, and capitalizing on emerging opportunities in a rapidly evolving market.
The first half of 2025 has reaffirmed the DACH region’s position as a dynamic and resilient hub for M&A activity. As global and regional trends converge, private equity and principal investors are poised to shape the next wave of dealmaking – leveraging innovation, sector expertise, and strategic vision to unlock value in an increasingly complex world.
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