European M&A in 2024: Recovery, Resilience, and the Road Ahead for 2025‍

As we step into 2025, the European M&A market finds itself at a turning point, marked by recovery, innovation, and shifting priorities. Despite persistent geopolitical tensions and economic challenges, 2024 saw deal-making bounce back with renewed energy, driven by stabilizing interest rates, falling inflation, and the urgent push for sustainability and technological transformation.

To better understand the trends shaping the market, we spoke to leading M&A professionals and clients across Europe. Their insights paint a picture of cautious optimism for 2025, highlighting key opportunities in technology, ESG, and creative deal-making. Whether you're a seasoned dealmaker or planning your next move, this analysis will provide a roadmap for navigating the complexities of the coming year.

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2024 saw a recovery in M&A activity, despite ongoing uncertainty

The M&A landscape in 2024 experienced a notable rebound compared to the stagnation of 2023. With stabilising interest rates, declining inflation, and a renewed appetite for investment, private equity firms and strategic investors returned to deal-making. Sectors such as IT, e-commerce, and energy saw increased consolidation as companies sought to strengthen their competitive edge.

“From our perspective, 2024 was more optimistic compared to 2023. Rates have stabilised, inflation has fallen sharply, and private equity investors are seizing new opportunities,” noted Martin Vachata, partner at Talers Business Advisory.

But not everyone is so upbeat. Despite these positive signs, risks remain. Geopolitical tensions such as the war in Ukraine and conflicts in the Middle East, and Europe’s stagnant economic growth, created a backdrop of uncertainty.

“Deal activity increased in 2024 but is still at a relatively low level. There was a notable shift towards technology, healthcare and other sectors that are seen as more resilient and with better growth potential,” said Robert Falk, partner at Bencis Capital Partners.

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Regional Highlights: Navigating Diverse Market Dynamics

Across Europe, M&A activity in 2024 reflected the varied economic, political, and regulatory environments of different regions, each presenting unique challenges and opportunities.

In Western Europe, the UK stood out as a hub of activity, with political uncertainty fueling a surge in transactions. The anticipation — and eventual implementation — of tax increases, including a rise in Capital Gains Tax, prompted a flurry of deal-making in the latter half of the year. Vendors sought to finalize transactions before the new tax policies take effect in April 2025, a trend likely to persist in early 2025.

Meanwhile, Central Europe presented a mixed picture. In the DACH region, Germany's M&A market was shaped by distressed transactions, as sluggish economic growth and declining competitiveness created pressure on businesses. Business succession uncertainties added further complexity, while small-cap deals were cautious in the lead-up to Germany’s 2025 elections.

Further to the east, Poland emerged as a bright spot, attracting international acquirers with its strong economic performance, increased EU funding, and improved investment climate following political changes in late 2023. Similarly, in Czechia, upcoming tax policy reforms spurred deal acceleration, as many business owners sought to exit ahead of the introduction of withholding taxes in 2025. Additionally, companies from Eastern Europe have increasingly shifted their focus to Western markets, largely due to growing uncertainties in the East. As Jaro Betlej, from the Polish company Betlej and Partners, explained at a Dealsuite lunch in Manchester: “Due to uncertainties, it is simply too difficult to pursue opportunities in Russia at this moment.”

Together, these regional dynamics illustrate how local factors — from tax policies to political shifts — play a crucial role in shaping Europe’s broader M&A landscape. By understanding these nuances, M&A professionals can better navigate the complexities and identify opportunities within each market.

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The energy transition and how it impacts M&A

Sustainability emerged as a critical driver of M&A activity in 2024, reshaping deal structures and valuation metrics. The European Union’s Corporate Sustainability Reporting Directive (CSRD), set to take effect in 2025, introduced stringent reporting requirements for companies. This development elevated the role of ESG compliance in M&A due diligence and decision-making.

“Buyers and investors are placing greater emphasis on sustainability metrics. ESG compliance and performance are now key drivers in M&A,” explained Marcin Majewski, Managing Partner at Aventis Advisors.

Smaller transactions also reflected this shift, with buyers deploying dedicated ESG advisory teams to scrutinise sustainability practices. As ESG considerations continue to rise, early-stage integration of these metrics is becoming a competitive necessity for businesses preparing for future transactions.

Further, this trend will also impact the types of deals themselves. “There will be much higher demand for companies that offer energy-efficient solutions or companies bringing new technologies to achieve sustainability goals,” said Jan Slaby, partner at Ecovis.

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Outlook for 2025: reasons for optimism

The M&A market in 2025 is poised for growth, driven by technological advancements, sustainability imperatives, and geopolitical developments. Lower interest rates and inflation will further enhance affordability and predictability, encouraging more deal activity.

“The key M&A trends for 2025 will be shaped by technology, sustainability, and geopolitical uncertainties. Companies are accelerating digital transformation, often through acquisitions,” shared Christian Vetter, project manager at Bachert und Partner.

Here are some of the key forces that will shape the market in 2025:

• Technology: AI and digital innovation will continue to dominate as companies seek to enhance efficiency and access cutting-edge capabilities through acquisitions.
• Sustainability: The CSRD’s implementation will drive deeper integration of ESG metrics into deal evaluations, creating opportunities for businesses that proactively align with these standards. Some respondents said that for smaller transactions the buyer already has an "ESG" team of advisors and the due diligence tends to analyse this area in considerable depth — a trend that is likely to accelerate.
• Geopolitical factors: The geopolitical landscape remains a wildcard, with potential impacts from the Ukraine war, Middle East conflicts, and global trade dynamics. The actions of the newly elected U.S. administration and developments in China-Taiwan relations may also influence European markets.

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Creative deal structures

High interest rates in recent years have prompted the emergence of innovative deal structures, including deferred payments, earn-out periods, and equity retention. These arrangements are expected to gain further traction in 2025, as stakeholders prioritise alignment and shared goals in transactions.

“We believe that we will continue to see creative deal structures in 2025,” noted Lewis Pearson, Corporate Finance Director at DJH Corporate Finance. “With an increase in the number of transactions incorporating equity retention as well as increasing deferred and earn-out time periods, Vendors are considering the fit with the potential acquirer more carefully at the outset of a transaction to ensure there are aligned values and goals.”

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How M&A firms are evolving in 2025

M&A professionals are embracing technology and diversification. In particular automation and artificial intelligence (AI) are becoming key tools for streamlining operations and decision-making.

“In 2025, we’re focusing on using AI and digital tools such as Dealsuite to work smarter, not harder,” said Martin Vachata. “By automating time-consuming tasks, we can focus on building stronger relationships with clients and improving deal outcomes.”

Floyd Plettenberg, CEO of Dealsuite, emphasizes the transformative impact of technology on modern deal-making and highlights the platform's growing role within the European M&A ecosystem: “Dealsuite now provides complete European coverage, with a network spanning the continent and an active community of dealmakers and dealflow across all countries. Notably, 30% of the projects listed involve companies with revenues exceeding €10 million, accurately reflecting the market landscape. This milestone represents a significant turning point for the industry, demonstrating that M&A professionals have fully embraced online deal sourcing through Dealsuite, leveraging it to identify opportunities faster and expand their reach.”  

Firms are also expanding their service offerings, integrating legal, tax, and business advisory capabilities to deliver comprehensive solutions. This multidisciplinary approach gives them a competitive edge by addressing the increasingly complex needs of clients.

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As we enter 2025, Opportunities abound

The European M&A market demonstrated remarkable resilience in 2024, navigating persistent challenges with stabilizing interest rates and declining inflation boosting confidence and deal-making activity. As interest rates are expected to decrease further, M&A deals may become more accessible and affordable in 2025.

Looking ahead, the outlook for 2025 is optimistic. A strong pipeline of deals is anticipated, with postponed PE exits from 2024 likely to come to fruition alongside improved deal performance. Emerging trends such as advancements in technology, AI, automation, and sustainability will continue to drive market dynamics, offering new opportunities for growth and innovation. Additionally, increased industry consolidation and creative deal structures are expected to shape the landscape.

However, the geopolitical climate in Europe and beyond remains a key factor that could influence market developments. Despite this uncertainty, the momentum gained in 2024 sets a promising stage for the year ahead.

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