Tech M&A Poised For Growth In 2025 Despite Temporary Challenges – Corporate and Company Law

Continued AI innovation, pent-up cash balances, and the
potential for renewed investor optimism and increased regulatory
clarity will likely drive dealmaking later this year, after the
bout of market uncertainty subsides.

Tech M&A rebounded in 2024 and is slated for further growth
this year, despite a recent rise in market uncertainty tied to
shifting federal policies.

Global tech M&A deal value reached $740.7 billion in 2024, a
46% increase from $506.4 billion in 2023, according to PitchBook.
Tech M&A deal value accounted for nearly 21% of all global
M&A value, ranking second only to the business-to-business
(B2B) sector.

Global M&A dealmaking started out 2025 on
weaker-than-expected footing, reflecting investor uncertainty due
to sudden policy shifts, including tariffs and executive orders.
However, this wave of uncertainty is likely to be temporary. As
markets, businesses, and policymakers adjust to the evolving
landscape, stability will return and boost dealmaking this
year.

Many of the factors that contributed to last year’s increase
in tech M&A activity still persist, including record levels of
cash sitting on balance sheets, corporate imperatives to boost
growth amid slowing organic expansion, and the rapid pace of
AI-driven innovation.

Software PE deal value in the US surged to $134.8 billion in
2024, representing a 32% increase from a year earlier, amid
dealmaking related to AI-focused software companies, PitchBook
figures show. As AI adoption accelerates, demand for data centers
and other infrastructure to support AI will continue to grow,
helping propel tech M&A in 2025.

Under the new presidential administration, antitrust and SEC
merger review processes are expected to become more predictable
while continuing to be thorough. Clearer rules may encourage more
acquisitions.

Further, M&A is a confidence game, and several factors could
converge to help lift investor optimism. If interest rates remain
stable or decline, IPO activity picks up, public company earnings
stay strong, and boardroom confidence grows, then what British
economist John Maynard Keynes referred to as “animal
spirits” could return.

In other words, the animal spirits might have gone into
temporary hibernation, but they will eventually emerge and drive
tech dealmaking in 2025.

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