European M&A and Private Equity in 2025: market trends and forecasts

The European M&A and Private Equity market in the third quarter of 2025 continues its consolidation phase, reflecting investors’ cautious and selective approach amid high interest rates, geopolitical uncertainty, and valuation gaps between buyers and sellers.
According to Andersen’s European M&A professionals, between July and September 3,571 M&A deals were completed for a total of €201.7 billion, along with 1,160 Private Equity transactions worth €51.3 billion.
Although the number of deals is lower than in previous years, total deal value remains strong, supported by a limited number of large-scale transactions.
This pattern confirms a structural market shift: investors are focusing on fewer but higher-quality deals, prioritising strategic acquisitions that deliver long-term value over volume.

The UK, the Netherlands, and Germany lead European M&A and PE activity

The United Kingdom remains Europe’s top M&A and Private Equity market by both deal count and value, recording 648 transactions worth over €50 billion.
The Netherlands climbs to second place (€33 billion, 164 deals), surpassing France and Italy thanks to several large-scale acquisitions.
Germany consolidates its position as a key industrial and financial hub, with 381 transactions worth €32.3 billion.
Italy, with 404 deals totalling €14.9 billion, drops in the overall ranking, while France shows similar figures.
Emerging markets such as Ireland, the Czech Republic, and Romania attract growing investor interest, particularly in infrastructure, energy, and digital sectors, supported by favourable tax and regulatory frameworks.

Energy, technology, and healthcare drive M&A activity in Europe

Sector performance reflects the market’s selective and value-driven approach.
The Energy & Power sector leads by value with €37.2 billion, followed by Financial Services (€35.2 billion) and Healthcare (€30 billion).
In terms of deal volume, Technology remains dominant with over 660 transactions worth €26 billion, ahead of Industrial and Consumer Staples sectors.
The rise of essential consumer goods – including food, beverages, and household products – highlights a growing preference for defensive investments that provide stability during periods of economic uncertainty.
By contrast, Real Estate continues to contract, impacted by rising financing costs and weaker short-term returns.
Overall, the 2025 European M&A market is increasingly polarised between high-value strategic transactions and a decline in small and mid-market deals.

Private Equity focuses on quality, infrastructure, and energy transition

The European Private Equity market mirrors these trends.
In Q3 2025, total deal value rose to €51.3 billion, with a strong rebound in September following the summer slowdown.
Once again, the increase in value stems from fewer but larger transactions, signalling a disciplined, selective investment strategy.
Germany leads the ranking (€17.4 billion, 188 deals), followed by the UK (€14 billion, 362 deals) and France (€13.3 billion, 95 deals).
Capital remains concentrated in Western Europe, while Central and Eastern Europe show rising activity, though more fragmented.
At sector level, Utilities dominate with €17.1 billion, representing about one-third of total deal value, followed by Technology (€7 billion, 527 deals) and Healthcare (€2.2 billion, 153 deals).
Investor appetite remains strong for infrastructure, renewable energy, and digital-first business models, while cyclical sectors such as retail and basic materials remain subdued.
Private credit continues to expand, providing an alternative to bank financing and supporting mid-market transactions in a high-interest-rate environment.

Key factors shaping the European M&A and PE market

Several factors are shaping the performance of the European M&A and Private Equity market in 2025:
• Higher financing costs: rising interest rates limit leverage and constrain acquisition strategies.
• Valuation misalignments: ongoing gaps between seller and buyer expectations slow deal execution, often resolved through earn-out mechanisms or hybrid structures.
• Regulatory and geopolitical challenges: new trade tariffs, stricter antitrust reviews, and European legislation such as the AI Act and CSRD increase deal complexity, favouring well-governed players.
• Focus on resilience: investors concentrate on stable, high-growth sectors such as energy, digital infrastructure, healthcare, and essential consumer goods.

Outlook for Q4 2025

Forecasts for Q4 2025 suggest a steady European M&A and Private Equity market, with volumes still below pre-2022 levels but sustained by strategic, high-value transactions.
A mid-market recovery is expected in 2026, supported by adaptation to new financing conditions and greater alignment on valuations.
Both investors and corporates continue to favour quality over quantity, targeting sustainable, technology-driven, and ESG-aligned business models.
In conclusion, 2025 will likely close with a selective yet resilient M&A and Private Equity environment in Europe, where the ability to identify long-term strategic targets remains the key competitive differentiator for companies and investment funds.