Selective and strategic: the rise of megadeals in a leaner M&A market

November 2025 | SPOTLIGHT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

November 2025 Issue

So far in 2025, even though global deal count dropped, a surge in value pushed overall activity higher. By midyear, worldwide deal values were up 15 percent compared to the same period in 2024, while the number of transactions fell by almost 9 percent. Over $1 trillion of transactions were announced this summer, up 30 percent from last year and the highest tally since the record-breaking summer of 2021.

From Union Pacific’s $85bn proposed merger with Norfolk Southern to Anglo American’s $53bn proposed merger with Teck Resources and Google’s $32bn proposed acquisition of Wiz, today’s deals are bigger, more complex and more consequential than in recent years. It appears that we have entered the megadeal era.

For dealmakers, this poses both an opportunity and a challenge. The traditional playbook built around a steady drumbeat of mid-market deals no longer cuts it. M&A professionals must adopt a different mindset: patience, resilience and precision, combined with the flawless execution of a small number of high-stakes moves. The winners will not be those who do the most deals, but those who are disciplined to do the right deals with a strategic fit, solid financing structure and strong integration plan.

The data story: from volume to value

Between 2020 and 2022, M&A activity surged post-pandemic, driven by lifted moods, abundant capital and low interest rates. In 2021, global deal volume topped 65,000 transactions – a record high. But by 2023, inflation concerns, geopolitical instability and shifting regulatory environments cooled the market and many mid-sized deals stalled or died outright. In 2025, the rebound has been selective. Year to date deal values reached $2.7 trillion globally by the end of August, more than 25 percent higher than 2024 levels, but with far fewer deals driving those figures.

A number of sectors continue to dominate global markets, as outlined below.

Technology. Technology, media and telecommunication transactions were the most active in the first half of 2025. Boosted by an increased focus on data privacy and artificial intelligence (AI), cyber security consolidations and AI capability acquisitions dominated the Americas.

Energy. Transactions in the global energy and materials space have been leading the Asia-Pacific market so far in 2025, with continued enthusiasm for renewable infrastructure and low-carbon fuels.

Financial institutions (FIs). FIs were the largest contributor to M&A activity in Europe, the Middle East and Africa (EMEA) in the first half of 2025.

Healthcare. Healthcare deals are up 95 percent year to date in EMEA from 2024, with a continued focus on vertical integration in pharmaceuticals and device manufacturing.

Industrials. Rail, shipping and logistics deals aimed at network efficiency have increased in values in the Americas by more than 50 percent since 2024. Deal volumes also remain high in the business services, automotive and manufacturing subsectors, suggesting continued appetite for high-quality industrial assets.

Megadeals have had a steady presence in global M&A over the last three decades. In the late 1990s, megadeals flourished in the telecommunications and finance sectors while coexisting with a strong mid-market pipeline. In the rebound from the global financial crisis of 2008, acquisitions fuelled by private equity were widespread across deal sizes. Today, megadeals stand out because they are often the only active deals in certain sectors.

The dominance of megadeals

Companies pursuing megadeals are doing so for targeted reasons.

First, strategic rationale. Megadeals contribute to consolidating market power and gaining a competitive edge, often in mature industries which can no longer grow organically at double-digit rates.

Second, investor and boardroom dynamics. Activist investors have grown more sophisticated, pushing boards to make bolder moves. Pension funds, sovereign wealth funds and large asset managers often prefer transformative plays over smaller bolt-on acquisitions.

Third, competitive pressures. Global markets are increasingly ‘winner takes most’ and competitors with vision, optimism and agility can take over the top spot by pursuing megadeals.

Megadeals no doubt present companies with significant opportunities. The proposed Anglo American-Teck Resources transaction promises $800m in pre-tax recurring annual synergies. That said, megadeals are not without peril. Beyond merging systems and processes, megadeals require aligning corporate cultures, leadership teams and brand positioning. A single misstep risks eroding projected synergies.

Equity’s resurgence

The increase in deal size has been accompanied by the return of equity financing. The proposed Union Pacific-Norfolk Southern transaction illustrates this trend, with $65bn to $70bn of the $85bn purchase price to be paid in stock. Stock-forward structures are also appearing in technology and life sciences megadeals.

Different reasons could explain the shift toward greater equity financing.

First, issuing shares can be less costly for companies than borrowing. High interest rates and cost pressures for potential buyers typically go hand in hand to create a shift toward scale deals, especially in industries facing high fixed expenses.

Second, given credit rating agencies assess debt levels, cash flow and liquidity, among other metrics, issuing equity rather than borrowing can help companies maintain their current ratings and avoid long-term financing headaches.

Third, sellers are likely to prefer equity financings if they believe in the prospect of the combined entities. By receiving stock shares, sellers align themselves with the anticipated post-closing growth of the business, which can lead to future upside.

Stock consideration can also allow sellers to defer the recognition of their gain if the deal qualifies for tax-free treatment.

The resurgence of equity poses various implications, including manoeuvring complex shareholder approval processes in public to public transactions and using contingent value rights, earn-outs or collars to bridge valuation gaps without overleveraging. Legal and financial advisers must balance valuation discipline against dilution concerns and negotiate terms that keep both sides committed through closing.

Regulatory and confidentiality challenges

Regulatory agencies worldwide have increased scrutiny of large-scale transactions, often coordinating across jurisdictions.

In the US, the Department of Justice and the Federal Trade Commission continue to pursue aggressive antitrust reviews. Many expected the revocation of policies enacted during the Biden administration early in President Trump’s second term, but most are still being enforced.

In the European Union (EU), the Directorate-General for Competition continues to apply merger control with particular attention on market concentration. European commissioners generally prohibit transactions that would significantly impede competition within the EU, especially if they would create or strengthen a dominant position.

In the UK, the Competition and Markets Authority (CMA) has prohibited more and more mergers over the past 10 years, particularly deals with domestic market impact. Earlier this year, the CMA introduced a new Mergers Charter and launched a review of its merger remedies framework, potentially shifting toward a more flexible and business-friendly regulatory environment.

Deal confidentiality is another growing issue globally. Almost 40 percent of takeovers of listed UK companies are reported in the media before their official announcement. In 2024, 64 percent of transactions valued over $10bn and involving an American party were leaked. Such leaks can derail negotiations, trigger premature market reactions and attract competing bidders. Deal teams should maintain tight control of insider lists, segregate due diligence streams, deploy secure data rooms, use project code names and limit verbal deal references.

Takeaways for dealmakers

For lawyers, the equity-heavy and hybrid packages used to finance megadeals require nuanced documentation and tax planning. Corporate and tax lawyers should get involved early to structure transactions intentionally and strategically.

Cross-border filings and extended merger review processes can stretch timelines. Proper sequencing is critical, and legal advisers should build in realistic buffers in timelines for unexpected delays. Lawyers should also consider negotiating stricter contractual terms and embedding protocols in nondisclosure agreements to limit leaks. Particular attention should also be paid to clean team agreements and who may (or may not) have access to confidential information.

In addition, boards require thorough documentation to support their decisions in transformative deals. Legal counsel should ensure the record reflects directors’ consideration of alternatives.

For financial advisers, today’s environment calls for intensified stress testing to carefully consider how macroeconomic, regulatory and geopolitical factors may influence deal valuation. Financial advisers should embed assumptions pertaining to rate fluctuations, tariff exposure and supply chain issues into their models to support M&A decision making.

Additionally, dealmakers should analyse all financing options available to optimise capital structures. With market rates remaining volatile, financial advisers should design packages that satisfy shareholders while reducing leverage. Helping boards develop and articulate an equity story and identify market windows when equity valuations and regulatory climates align is more important than ever.

Since increased government debt tends to dampen investor appetite for M&A, financial advisers should carefully manage the narrative for long-term strategic plays which may depress near-term earnings.

Mastering the art of the right deal

The M&A market of 2025 rewards patience and precision over volume. Some mid-market activity will likely return if interest rates ease in late 2025 or 2026, but megadeals should retain their presence in global M&A. Lawyers and investment bankers must refine their craft of identifying transformational deals and executing them with discipline. In this megadeal era, the measure of dealmakers’ success is no longer how often they play, but how decisively they win the few games that matter.

Frank Aquila is a partner and Emma Ouellet Lizotte is an associate at Sullivan & Cromwell LLP. Mr Aquila can be contacted on +1 (212) 558 4048 or by email: aquilaf@sullcrom.com. Ms Ouellet Lizotte can be contacted on +1 (212) 558 4651 or by email: ouelletlizottee@sullcrom.com.

Frank Aquila and Emma Ouellet Lizotte

Sullivan & Cromwell LLP