Dealmaker's Digest: A Top 10 Bulletin - February 2025

Deal Value Trends

Aggregate global monthly deal value¹ in January fell 18%, or about $60 billion, from December. Total deal value was up slightly (6%) year-over-year.

Transactions involving strategic buyers in January decreased 20% by deal value from December and 12% year-over-year.

Financial, or sponsor, buyer transactions declined 17% in January, barely exceeding $100 billion for the month. However, sponsor buyer deal value was up significantly (55%) year-over-year.

Deal Count Trends

Global deal count decreased 13% in January from December but held steady year-over-year, down just 1%.

Strategic buyer deal count in January fell 20% from December but held steady year-over-year, with a 0% change.

Sponsor buyer deal count in January remained consistent both month-over-month (up just 1%) and year-over-year (down only 2%).

By Deal Count

• The software industry remained at the top for U.S. M&A activity by deal count in January, continuing its streak as the leading industry by volume, with more than twice as many deals as the runner-up.
• Services-based industries continue to remain active, with financial services and other professional services rounding out the top three sectors in January by deal count.

By Deal Value

• The energy industry topped the charts by deal value in January, with a $16 billion+ deal announced by Constellation, highlighted below.
• Software took second place in January for deal value, with three of the 10 largest U.S. deals for the month involving a target in the software sector. Targets in the biotech industry came in close behind at third.

Largest U.S. Energy Deal

Constellation Energy Corporation has agreed to acquire Calpine Corporation for a mix of cash and stock with total equity value of approximately $16.4 billion.

Largest U.S. Biotech Deal

Johnson & Johnson has agreed to acquire Intra-Cellular Therapies, Inc. in an all-cash transaction with equity value of approximately $14.6 billion.

Inbound U.S. M&A Activity

• By deal value, inbound U.S. activity rose 34% in January from December’s six-month low. Year-over-year, inbound deal value was up 7%.
• By deal count, acquisitions of U.S. targets by non-U.S. acquirers increased 27% in January from December’s 10-month low. Year-over-year, inbound deal count held steady, down just 1%.
• UK-based acquirers undertook the largest number of inbound transactions in January, with 22 deals, followed closely by Canada at 20. Japan trailed in third with six deals.
  
  

Outbound U.S. M&A Activity

• By deal value, outbound activity in January dropped 45% from December but was up 7% year-over-year.
• By deal count, acquisitions of ex-U.S. targets by U.S. buyers decreased from December to January by 17%. Year-over-year, outbound deal count fell 11%.
• U.S. acquirers most frequently looked to targets in the UK in January, with 31 transactions. Canada and Ireland trailed with 14 and 11 transactions, respectively.

Unsolicited & Hostile Transactions

• Heading into 2025, market conditions—including interest rate trends and shifting regulatory priorities—appeared ripe for an uptick in unsolicited or hostile activity.
• It is too early for sweeping projections, but hostile bids in 2025 have significantly outpaced activity in recent years: More than 30% of public overtures have been unsolicited and one bid has turned hostile in the first five weeks of the year.
• Hostile activity had moderately declined in 2023 and 2024, as both a percentage of overall M&A activity (under 20%) and raw count (under 40 annually).
• Assuming the upward trend continues, readiness planning by boards and advisors (e.g., defensive profile analyses and proactive stakeholder engagement) will become even more critical in the months ahead.

Acquisition Premiums

• Acquisition premiums broadly declined in 2023-2024. Among sponsor-led acquisitions, average premiums fell from 55% in 2022 to 33% in 2024. YTD 2025 metrics indicate a moderate increase (38%).
• Among strategic transactions, average premiums fell from 48% in 2023 to 40% in 2024, with a marginal increase so far this year.
• Prior to 2023, sponsor buyers on average offered substantially higher premiums (10%+) than strategic acquirers. Following turbulent M&A conditions in recent years, including increased borrowing costs, premiums offered by strategic firms have moderately surpassed sponsor deals on average. Median premiums have largely synchronized across buyer types over the past two years.

For more information, please contact your usual Ropes & Gray attorney or reach out to a member of our M&A team below.