APAC M&A Surge in 2025 Underscores Strategic Shifts and AI Adoption

Mergers and acquisitions (M&A) activity in the Asia Pacific (APAC) region in 2025 outperformed companies not engaged in dealmaking, with the market on track for a strong year according to WTW research. A combination of pent-up demand, stock market highs, and steady interest rates has driven a resurgence in M&A activity, signaling positive momentum heading into 2026. Despite ongoing geopolitical tensions, tariff uncertainties, and regulatory challenges, buyers have adapted to this environment, focusing on early integration and sustainable growth strategies during due diligence. The third quarter of 2025 saw the closure of eight megadeals valued over $10 billion globally, the highest since 2018, along with an increase in large deals valued over $1 billion. The trend for 2026 points toward portfolio optimization through de-conglomeration and a back-to-basics approach emphasizing core strengths. Mid-market deals are expected to proliferate with smaller, complementary acquisitions aimed at rapid expansion, synergies, and technology integration. Key sectors attracting attention include energy, defense, biopharma, and technology, while consumer-focused sectors face headwinds due to cost of living pressures. North America's M&A market showed the most significant rebound in 2025 after a prolonged downturn, supported by robust GDP growth and potential Federal Reserve rate cuts that may ease financing conditions further. The space is expected to maintain momentum into 2026 despite lingering policy and market volatility. Private equity-backed M&A transactions are projected to increase due to substantial undeployed capital, improved exit opportunities, and more favorable debt conditions. The adoption of continuation funds is anticipated to become mainstream, enabling portfolio asset transfers that provide liquidity for existing investors and fresh capital for new investments. Artificial intelligence (AI) is increasingly integrated into the M&A process, assisting in target scouting, enhanced due diligence, and post-transaction integration. However, AI adoption also introduces governance and operational risks that require careful management to realize its full potential. Overall, the APAC M&A outlook is optimistic with expectations for increased deal activity driven by scale, innovation, and market expansion. WTW’s comprehensive M&A services emphasize risk management and human capital strategies critical to supporting successful transactions and long-term value creation in a complex market environment.