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Surprise, surprise: winning M&A strategies for turbulent times
Global M&A industry trends: 2025 mid-year outlook
At the start of the year, our M&A outlook was shaped by the theme “big deals, winning hands, and wild cards”. We were cautiously optimistic – but the wild cards proved wilder than expected. Tariff tensions, geopolitical conflicts, and persistent long-term interest rates have created a volatile environment.
Yet deals are still happening. Despite a 9% drop in deal volumes in H1 2025, deal values rose by 15%, driven by large, strategic transactions. Strong companies with solid fundamentals continue to attract buyers, while others struggle to gain traction.
This reflects the era we have entered, one in which artificial intelligence (AI) and evolving competitive dynamics are reshaping the corporate landscape, serving as powerful drivers of disruption and change. As this new generation of technologies takes hold, it’s likely to spark more deal activity. In today’s market, the key question isn’t whether to pursue M&A – but how to succeed in the face of rapid change and instability.
Three trends define the deal landscape
Amid the volatility, a mix of sometimes contradictory forces is shaping M&A activity and strategy in 2025 – influencing what kind, where, and why deals are happening. Dealmakers must learn to navigate complexity and ambiguity – operating decisively in an environment where uncertainty is the only constant.
“As we move into the second half of 2025, the intersection of AI-driven change, geopolitical uncertainty, and shifting capital priorities continues to reshape the M&A landscape. Dealmakers must navigate this complexity with boldness and strategic focus – turning uncertainty into opportunity and positioning for value creation.”
Marc SchmidliPartner, Deals Leader, PwC Switzerland
Key issues in the second half of 2025
Against the backdrop of continued geopolitical tensions and abrupt tariff moves, momentum is building around key deal themes – but dealmakers must navigate critical challenges, both new and longstanding.
The three main issues we see are:
Long-term interest rates remain high
Long-term interest rates remain persistently high in some countries, even as central banks in Europe have cut benchmark rates in response to slowing growth and lower inflation. In the US, yields on longer-dated government bonds have continued to rise, reflecting market concerns such as growing fiscal deficits. This disconnect is weighing on deal sentiment, as interest rates remain a key factor influencing M&A activity alongside valuations. If rates were to fall, it could support a broader recovery in dealmaking. In the meantime, dealmakers must carefully evaluate financing options, including private credit, to optimise capital structures.
Government debt casts a long shadow
Rising government debt is becoming a key concern for the M&A market. In OECD countries, debt levels are projected to reach 85% of GDP in 2025 – nearly double the ratio seen before the global financial crisis. Interest payments now exceed total defence spending, underscoring mounting fiscal pressure. For dealmakers, this means increased long-term uncertainty, higher interest rates, and slower economic growth – all of which can weigh on earnings, reduce valuations, and dampen investor appetite. To stay ahead, dealmakers should factor debt-related risks and sensitivities into their valuation models and scenario planning.
Private equity exits lag, but pressure is building
Private equity exits remain a key pressure point for the M&A market. Nearly half of PE-backed companies have been held since 2020, and the backlog continues to grow. While exit volumes rose slightly in early 2025, the pace is still too slow to ease the overhang. A weak IPO market and tough deal conditions are limiting traditional exits, though recent listings suggest a possible shift. PE firms are increasingly using continuation funds and secondary transactions to create liquidity, but these don’t fully clear portfolios. Given PE’s central role in M&A, the pace of exits will be critical in the months ahead.
Takeaways for dealmakers
To succeed in today’s complex M&A environment, dealmakers need more than just opportunity – they need strategic clarity, resilience under pressure, and the agility to adapt with confidence.
Those who lead the way will:
- Focus on high-quality assets aligned with long-term themes such as AI, climate, and supply chain resilience
- Assess geographic and supply chain exposure in light of tariff and geopolitical risks
- Anchor their M&A strategy in structural shifts rather than reacting to short-term volatility
- Strengthen scenario planning and pricing discipline
- Prioritise execution from day one, with clear value creation plans
For a closer look at how these strategies play out, explore our sector-specific insights in the Swiss mid-year M&A blog series.
“The deals environment is both frustrating and extraordinarily exciting. As the market spins new challenges, it’s easy to hoard cash and hit pause, but we advocate doing the opposite: focus on thematics, drive your analysis deeper than ever and bring your strategy to life.”
Industry takeaways – developing
Industry takeaways – developing
Learn more about the key trends driving M&A activity globally in 2025. For potential investment hotspots check out our updated global industry-specific takeaways.
And how about the situation in Switzerland? In the next few weeks, our industry experts will be sharing their mid-year perspectives on M&A trends in Switzerland ‒ including key developments, sector-specific insights, and areas to monitor in the second half of 2025. Stay tuned.
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Marc Schmidli