INTRODUCTION Contributed by: Frank Aquila, Sullivan & Cromwell LLP
Sector themes: convergence, technology, and realignment Technology again led global M&A by value. Demand surged for assets tied to AI infrastructure, semicon - ductor design and fabrication, cybersecurity, and high‑performance computing. Buyers – both strategic and financial – competed for proprietary algorithms, advanced hardware capabilities, and elite engineer - ing talent. Generative AI integration remained a global priority, driving acquisitions aimed at embedding AI into core operations. Industrial and infrastructure deal making gained momentum as companies pursued supply‑chain diversification, near‑shoring, and logistics realign - ment. Policy‑driven investments in transportation, energy transition, and digital infrastructure further supported activity. Consumer‑facing sectors experi - enced more disciplined deal making, with acquirers prioritising balance‑sheet strength and synergy vis - ibility. Global regulatory evolution: flexibility, intervention, and complexity Regulators worldwide adopted more nuanced – though increasingly complex – approaches in 2025. In the United States, antitrust authorities reintroduced structural remedies after years of favouring litigation and outright blocks. Settlements in Synopsys/Ansys and Keysight/Spirent signalled a pragmatic shift, with clean divestitures preferred over conduct‑based remedies. For global deal makers, this restored some predictability for transactions involving US regulatory review. Tax authorities also adjusted course. The US Treasury withdrew restrictive proposed rules on tax‑free corpo - rate spin‑offs, reinstating a more familiar and flexible ruling process. The move eased concerns for multina - tional companies considering separation transactions, even as questions linger about future rulemaking. Meanwhile, updated SEC guidance modernised the treatment of voting agreements in stock‑for‑stock mergers, enabling target‑insider voting agreements before Form S‑4 filings under specified conditions.
Global M&A in 2025 and the Outlook for 2026 The global M&A market in 2025 marked a turning point after two uneven years. Although overall deal volume remained subdued, transaction value rose sharply as companies and financial sponsors concentrated capital on fewer but significantly larger transactions. Through the first 11 months of 2025, worldwide deal activity totalled USD3.7 trillion – an increase of 31% compared to the same period in 2024 – driven largely by a resurgence in public‑to‑private transactions and a decisive return of the mega‑deal. 49 transactions valued at more than USD10 billion, totalling approxi - mately USD1 trillion, were announced during this peri - od, marking the most active stretch for mega‑deals since global records began in 1980. Competitive dynamics also intensified. Unsolicited proposals and topping bids re‑emerged across key sectors, exemplified by Novo Nordisk’s USD10 billion unsolicited bid for Metsera and Paramount’s all‑cash topping offer for Warner Bros. Discovery. These developments signalled that, despite macroeconom - ic uncertainty, boards and deal teams regained the conviction to pursue transformative strategic combi - nations. However, the surge in deal value masked continued softness in the global middle market. Deal counts fell roughly 5% year‑over‑year through the first 11 months of 2025. Persistent valuation gaps, uneven financing conditions, and macro‑economic uncertainty – par - ticularly inflation variability and rate instability – kept many financial sponsors cautious. Despite record dry‑powder levels, private equity firms deployed selectively, favouring platform‑scale acquisitions in technology, infrastructure, and energy. Private equity still played an outsized role. Spon - sor‑backed M&A totalled USD654.4 billion globally through Q3 2025, a 27% increase from the same period in 2024. Take‑private activity accounted for USD195.3 billion of that figure, already surpassing full‑year totals for 2023 and 2024. The USD55 billion take‑private of Electronic Arts by Silver Lake and partners became the largest leveraged buyout ever recorded. Activity was particularly concentrated in technology and ener - gy‑transition sectors, where sponsors sought assets with durable demand, defensibility, and scarcity value.
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