Tech M&A Poised for Growth in 2025 Despite Temporary Challenges

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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