M&A Market Signaling an Upturn in the Second Half of 2025 (Baird)

Summary

• Global M&A deal count fell (13%) in H1 2025 vs. H1 2024, while total deal value rose +16%.p.2
• Global PE M&A exit value jumped +58% in H1 2025 despite a (3%) decline in exit deal count.p.2
• Transactions valued at $1B+ grew +22% in deal count and +23% in deal value during H1 2025.p.2
• Baird's active M&A backlog value at mid-year climbed 26% year-over-year to a record high.p.4
• The number of U.S. PE-backed companies held for 5+ years increased 30% since the start of 2021.p.6
• Public companies in the U.S., Europe, and Japan held $4.4 trillion in cash balances entering 2025, up ~30% over five years.p.7

Key insights

1. 1. Prospective buyers and sellers are showing increased proficiency at navigating macro challenges, positioning H2 2025 for a potential M&A rebound.p.1
2. 2. Technology & Services outperformed other sectors in the $100M-$1B segment with deal count up +18% and deal value up +23% in H1 2025.p.2
3. 3. Large deal outperformance of $1+ billion historically acts as a precursor and leading indicator for broader M&A growth.p.5
4. 4. U.S. buyout fund distribution to paid-in capital improved to nearly 20% for the trailing 12 months through Q1 2025 from a 15% average in 2022-2024.p.6
5. 5. U.S. buyout dry powder aged two-plus years reached $530 billion in 2024, up 82% since the end of 2021.p.6
6. 6. Strategic corporate M&A deal value in Technology & Services jumped 44% in H1 2025 despite a 10% decline in overall strategic deal count.p.7
7. 7. Public companies globally used stock in 43 transactions valued at $1+ billion in Q2 2025, reaching the highest quarterly total since Q4 2021.p.7