The European mergers and acquisition market is dynamic, despite political uncertainties

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Uncertainty has become an essential characteristic of the landscape of mergers. Consequently, acquisitions in recent years. Similarly, After an exceptional post -pandemic rebound. However, a catastrophic 2023 year 2023, the end of 2024 marked a period of hope for business leaders – before American trade policy came to spoil the party.

“Despite persistent macroeconomic opposite winds. Moreover, including a risk of high recession, geopolitical instability and new commercial frictions, world mergers-acquisitions have remarkably resisted in the first half of 2025”said Garrett Hinds, principal PE research analyst at Pitchbook.

“The total value of transactions reached $ 2,000 billion for 24,793 transactions in the first half of 2025, which represents an increase of 13.6 % and 16.2 % in annual sliding, respectively”he said in the latest Pitchbook european mergers acquisition market dynamic, report on mergers and acquisitions.

If the world landscape seems surprisingly optimistic, the same goes for the environment of transactions in Europe. Consequently, In fact. Similarly, if companies can repeat the number of operations carried out during the first half of 2025, the number of mergers and acquisitions in Europe should have its best year for more than a decade.

The valuation gap – European mergers acquisition market dynamic,

Last year represented a period of recovery for transactions after a period of increase in interest rates. Furthermore, economic uncertainty in 2023. Meanwhile, Despite this, negotiations remained blocked by evaluation differences, buyers and sellers failing to agree on the value of companies.

“When a company acquired a company. for example, during the mergers and acquisition booms in 2020 and it plans to sell it in 2025, following an increase in interest rates, inflation and customs tariffs, the seller will expect the value of the company to increase european mergers acquisition market dynamic, or to recover his money”told Euronews Lorenzo Corte, a global co-responsible for the transactional practice of Skadden.

He continues “Often, these expectations do not correspond to those of buyers … Consequently, which means that the sale does not take place. Furthermore, that it takes place with mechanisms designed to fill the difference in value, which can be quite complicated.”

One of the ways to achieve it is to use a mechanism of “Price supplement”. Moreover, This mechanism allows the buyer to pay part of the purchase price on a later date. and the amount due depends on the performance of the company.

If the global economic environment remains unstable. the decline in inflation and interest rates means that valuation differences are less problematic.

“When we went from a low interest rate environment to a higher interest rate environment. people simply could not do their modeling”said Nigel Wellings, partner and co european mergers acquisition market dynamic, -responsible for companies in Europe at Clifford Chance, “So they could not calculate the cost of their debt over three or five years. And if you cannot do it, it is very difficult for a buyer to reach an assessment.”

He adds that even if uncertainty persists, companies have “A better idea of the management that the rates will take”.

A transfer landscape in changing – European mergers acquisition market dynamic,

Business leaders are forced to reassess their priorities in a changing world. especially when themes such as ecological transition and artificial intelligence occupy the stage.

This is one of the factors that motivate mergers. acquisitions in 2025, companies seeking to sell non-essential units or to acquire others to reposition themselves.

“Many CEOs that we question each year as part of the Global CEO Survey tell us that they do not think that their business model is really adapted if we consider the next 10 years”said european mergers acquisition market dynamic, Erik Humitzsch. partner and manager of EMEA and German transactions at Pwc Germany.

He told Euronews that “Consequently. mergers and acquisitions are used to sell parts of the company that may not work during the next decade. Companies can also buy other companies to adopt a different approach in the management of their portfolio”.

Companies also sell. acquire activities to adapt to geopolitical changes, limiting their exposure to difficult markets while strengthening their presence on other markets.

Pitchbook analysts expect in particular that the sectors where the margins are narrow are increasingly consolidated this year. For example. automotive and chemistry sectors may be forced to reduce their activities due to the pressure on costs, largely linked to customs duties imposed by the United States government. The increase in expenditure in aerospace. defense also makes companies in these sectors interesting targets for mergers and acquisitions focused on growth.

From April to european mergers acquisition market dynamic, June. the information technology sector was the only area in Europe to record an increase in the value of mergers and acquisitions from one quarter to another, with an increase of 36.6 %.

Is Europe still too cautious?

At the end of last year. optimism in the United States was partly motivated by the conviction that President Trump would relax the regulatory controls on transactions.

In Europe, Lorenzo Corte de Skadden said that similar enthusiasm had been aroused by the Draghi report, published in September. This report. which arrived with great fanfare in Brussels, included a series of proposals on the competitiveness of the EU, written by the former president of the ECB, Mario Draghi.

“The Draghi report was a call to encourage consolidation in Europe so that European companies can compete with their. world competitors more efficiently“Said Lorenzo Corte.

“So I think that market players expected a large number european mergers acquisition market dynamic, of consolidations to start in Europe. I think there have been. that it will continue, even if the period is still too short to assess a real trend.”

When it comes to approving mergers, the EU is often criticized for its too much caution. The Commission. for example, blocked agreements between the giants of the railway sector Siemens Mobility and Alstom, or between the airlines Ryanair and Aer Lingus, fearing that they would harm competition on the market. An agreement between Mars and Kellanova is currently blocked pending the green light from competition managers.

The Commission is not the only one to block operations. National governments can also complicate mergers. as evidenced by the hostility of the Spanish government with regard to the acquisition of the Sabadell rival bank by BBVA.

According to Nigel Wellings. by Clifford Chance, the EU has realized that it cannot be content to react negatively european mergers acquisition market dynamic, on a scale and that “Big doesn’t always mean bad”. He added “If you are in a sector such as financial services. where you compete on a global scale, the scale and being a European champion are positive.”

EU’s ability to encourage industrial champions is also particularly relevant in defense. In response to geopolitical tensions. requests from US President Donald Trump, the Member States increased their military spending, Germany having notably relaxed its debt brake rule to stimulate defense and infrastructure capacities.

European mergers acquisition market dynamic.

Geopolitical uncertainties

According to analysts, this year’s mergers and acquisitions market is neither in full effervescence nor completely sluggish, customs prices and economic risks being counterbalanced by relaxation of interest rates and greater appetite for large -scale operations.

The trajectory of the coming months largely depends on President Trump’s customs tariffs and their economic consequences. Investors will also follow the evolution of the european mergers acquisition market dynamic, situation in Ukraine. regulatory changes and decisions of the ECB and the Federal Interest Rate Reserve.

Investment capital outflows. when investors in investment sell a business and restore money to investors, were also relatively low during the past year. If investment capital companies manage to absorb the accumulated delay. release capital, it is likely that the momentum will strengthen during the coming year.

“We are not in an intensive sales process where you put something on the market. where three or four tenderers present themselves immediately”declared Nigel Wellings, “But if we proceed correctly and work hard on the evaluation, we see transactions materialize.”