Outlook: value, verticals and what’s next
Our analysis of cross-border M&A with Bayes Business School identified some of the best performing sectors over the past six years, revealing the industries that have dominated global dealmaking. Our survey also provides insights on the sectors that are likely to be most active through the remainder of this decade.
The sectors that dealmakers expect to be most active through to 2030 are:
Technology, media & communications
Energy & infrastructure
Life sciences & healthcare
Technology, media & communications
There were more cross-border deals completed in the technology, media & communications industry between 2018 and 2024 than any other segment. The analysis by Bayes Business School shows this sector also saw strong performance for acquirers one month post-deal. Looking ahead, our survey data suggests that the US and UK are expected to be the most attractive regions in terms of driving value creation for tech acquirers.
The real spikes in valuations right now are in AI and defence tech. That’s where a lot of the venture and private equity community are putting their money.
Mark Barron, Partner, Taylor Wessing
TMT is so active because it changes more quickly than any of the other sectors, and that means that, in certain cases, in order to keep up or to move ahead, you need to use M&A just as a way to do things faster and to keep up.
It’s not that Big Tech can’t build things and so have to acquire – they have the developer talent – it’s about the opportunity cost. Allocating development time to a new initiative must displace something else on the roadmap. So, making an acquisition becomes a way to move faster without compromising on the other things they are already doing.
Daniel Domberger, Managing Director, Arrowpoint Advisory
Technology is such a fast-moving sector that companies often choose to buy rather than build, in order to keep up or move ahead of competitors. Non-tech companies are also large purchasers of specialised technology companies for this reason too. Interestingly, average deal values were amongst the lowest. This may be because these non-tech buyers are typically targeting smaller pockets of expertise or a specific product that they need and don’t want to grow it organically internally.
Comments made from the survey showed that AI is clearly going to continue to be a major driver of deal flow, while military tech is also becoming a hot sector given the intensity of global geopolitical unrest.
Energy & infrastructure
Energy & infrastructure is predicted to be the second most prolific sector for cross-border M&A, on the back of massive global spending plans, particularly around the energy transition.
Meanwhile, in light of the German supplementary budgets – the so-called Sondervermögen – of €500bn for investments in the defence and infrastructure sectors that have recently been approved by the German Bundestag, German deal volumes in this area are expected to be particularly high.
The new government in Germany will continue to pursue renewable energy goals, and this pursuit of the energy transition will continue to make the region attractive for cross-border acquirers. We will see a growing number of wind and solar developments alongside the development of projects for battery storage, which is already a huge market. That said, it remains to be seen whether all of that storage can contribute to grid stability, so we’re still expecting that there will be a certain need for gas-fired plants at least in the short term.
Carsten Bartholl, Partner, Taylor Wessing
of energy & infrastructure dealmakers think the US regulatory environment could hinder M&A success.
Dealmakers specialising in energy & infrastructure are divided on the US as a destination, however. This could be a response to uncertainty over the future of major regulatory regimes such as the US Inflation Reduction Act (IRA) and Jumpstart Our Business Startups (JOBS) Act and significant changes introduced by the new US administration.
Life sciences & healthcare
Life sciences & healthcare has experienced a huge boom in the wake of the COVID-19 pandemic, with the sector producing some of the biggest deals of the past six years, averaging over US$4bn for deals over US$250m.
Dealmakers are now predicting another busy few years for M&A. With a critical mass of patents due to expire and earlier acquisitions now bedded in, companies are refining business models and freeing up balance sheet capital to pursue more M&A.
The life sciences & healthcare industry will remain strong, despite some of the recent headwinds due to non-sector-specific geopolitical events. M&A has become a key lever for acquiring talent, technology and R&D pipelines at scale.
Professor Scott Moeller, Director of the M&A Research Centre, Bayes Business School
We’ve seen less cross-border activity in the last year with China and more broadly in Asia, particularly in healthcare. Up to a decade ago, there was a lot of inbound China-based private equity active in Europe, but this has now died down. The Inflation Reduction Act in the US started a feeling that investment needs to be localised in some areas of healthcare, particularly in pharmaceuticals.
Paul Tomasic, Managing Director and Head of European Healthcare, Houlihan Lokey
Where next?
Despite uncertainty caused by unpredictable policy decisions on tariffs, dealmakers remain cautiously optimistic about the 12-month outlook for cross-border M&A.
While varying in intensity, this optimism appears to pervade all jurisdictions. Crucially, it also appears to have survived the announcement of the 'Liberation Day' tariffs.
On average, 74% of global dealmakers are positive about M&A over the next 12 months.
While dealmakers display defiant optimism over the medium term, there is no doubt that international conflict and shifting tariff regimes continue to hinder deal confidence. In some cases, deals are being put on hold or even called off altogether, not simply because tariffs are in place, but because there is uncertainty over whether these regimes will continue to apply or at what level they will take effect. That kind of unpredictability makes it incredibly difficult to plan cross-border transactions, especially where access to the US market is a key pillar of a business strategy.
We are facing a great deal of uncertainty, in some ways not dissimilar to what we saw at the start of COVID-19. It is hard to come to any reasonable judgement around valuations or to make any long-term strategic plans given the level of volatility we have seen in the stock markets.
Mark Barron, Partner, Taylor Wessing
Uncertainty, whether political, macroeconomic or other, is always detrimental to deal activity.
Dr Christian Traichel, Co-Head of International Corporate, Taylor Wessing
Only if and when we have clarity on what President Trump’s tariff regime will ultimately look like, along with any retaliatory measures, will the implications in terms of inflation, economic growth and currency movements begin to become clearer, together with the associated impacts on dealmaking. The drivers for cross-border M&A remain powerful at both a corporate and national level but dealmakers value certainty above all else in order to consummate those deals.
Cross-border M&A is about more than price – it depends on confidence in the deal, the structure and the economic outlook. There are buyers (and indeed sellers) who are now deferring deals while they wait for a clearer line of sight, but our data shows there is still plenty of positivity about the outlook, and both buyers and sellers with the right conviction are getting deals done.
Emma Danks, Co-Head of International Corporate, Taylor Wessing