Dealmaking activity rose in 2025 despite geopolitical headwinds, EY finds

According to analysis by EY’s financial services team, and its annual M&A Firepower report released on Monday (12 January), global mergers and acquisitions (M&A) activity ticked upwards in 2025 despite regulatory and geopolitical headwinds.

Global life sciences M&A activity surged by 81 per cent in 2025 to US$240 billion, EY revealed, while M&A transactions in the global financial services sector rose 49 per cent year on year.

“Market conditions continued to challenge global financial services dealmaking in 2025 but did not dampen investment appetite within the sector,” Omar Ali, EY global financial services leader, said.

“With more than 2,000 financial services deals announced or completed worldwide in 2025 – including 93 megadeals – growth, scaling, and innovation are clearly at the top of the agenda, and firms are increasingly emboldened to transact higher-quality assets that command premium valuations to achieve their competitive goals.”

M&A in the financial services sector was boosted by a significant increase in the number of large deals over $1 billion, which rose by more than 70 per cent. Every region reported a growth in deal value, Ali noted.

Looking towards the life sciences sector, EY noted that M&A activity increased by 81 per cent in 2025, despite a decrease in the overall number of transactions. Activity was buoyed by large-scale deals in the big pharma sector, as well as heightened activity in China, which accounted for 34 per cent of alliance investment in 2025.

EY Global added that AI was reshaping the dealmaking landscape, finding a 256 per cent increase in the potential value of life sciences deals geared towards AI technology platforms. It said that AI was becoming central to accelerating and optimising the deal cycle.

Furthermore, the M&A Firepower report found that M&A activity in the life sciences sector had remained strong in 2025 despite regulatory and geopolitical headwinds.

“Overall industry fundamentals remain strong, driven by the loss of exclusivity and availability of Firepower for Biopharma companies,” Subin Baral, EY-Parthenon global life sciences deals leader, said.

“Dealmaking remains essential for growth, and despite headwinds – including regulatory and geopolitical uncertainty, high valuations, and capital-allocation tradeoffs – we anticipate a strong 2026.”

Andre Veissid, EY-Parthenon global financial services industry leader, said the global financial services industry saw “impressive overall value” in dealmaking throughout 2025, with many large-scale deals taking place throughout the year.

“Firms engaged in strategic M&A, and at the top end of dealmaking, more megadeals completed in 2025 than in the two years prior combined, as corporate balance sheets strengthened and regulation softened, especially in the US,” Veissid said.

“Looking ahead, provided inflation and interest rates continue to fall back across major financial markets, confidence is expected to pick up even more. This should boost acquisition appetite further, as firms use M&A activity to support revenue growth and cost optimisation.”