What to Expect for Tech M&A in 2025

As 2024 draws to a close, our Tech M&A team consider what's next for 2025 with five key trends our team see shaping the landscape next year and we share what this means for clients.

1. Tariffs and Foreign Investment Scrutiny: Preparedness is Key

With an incoming U.S. administration that campaigned on significant tariffs on major trading partners, technology companies and investors need to prepare now. The return of tariffs – as well as the global reaction via potential tariff or regulatory retaliatory measures - could disrupt supply chains, pressure margins, and shift customer demand. Clients should be stress-testing operations, understanding the impact on their supply chains, and engaging in forward-looking planning to mitigate these risks to stay resilient amidst potential trade uncertainty.

2. PE-Driven Tech M&A: Opportunities for Strategic Transactions

2024 saw another boost in Tech deal activity, and all signs point to a continued uptick in 2025. Private equity funds are sitting on record levels of dry powder and are under increasing pressure to show DPI. As certain funds near the end of their cycle, the need to deliver exits will only intensify. NAV loans and leveraged recapitalizations have helped deliver distributions to LPs, but they are interim solutions. Meanwhile, the valuation gap between buyers and sellers is narrowing, which should support increased deal-making. Expect to see a lot of activity in the coming year.

3. Fundraising: The Two-Tier Divide Continues

The fundraising landscape remains split. For high-growth, market-leading companies in hot sectors (anything AI-related), capital continues to flow. For others, the environment is much tougher—prolonged timelines, valuation cuts, and structured terms remain on the cards. Many startups are facing hard realities as they come up against their cash runway , including shutdowns or acqui-hires. Companies need to focus on their path to profitability and financial discipline, demonstrating strong business fundamentals.

4. AI Investment: A Digital Infrastructure Boom

AI will continue to reshape sectors with its impact felt via next generation AI processors, models and promising implementations (such as AI agents), but the real action for 2025 is going to be in digital infrastructure. Building the necessary compute power and data centres requires enormous capital—and the demand is staggering. Big Tech spent over $60 billion in capex in Q3 24. Data centre inventory growth was already outstripped by demand, so this new AI overlay will only increase urgency and opportunities for investment via M&A, joint ventures (active or passive), brownfield development, greenfield development, real estate and (powered) land banking deals. However, those not planning for scale risk falling behind. The US is by far leading, but other regions across EMEA and APAC are also building capacity as AI hubs. This is an area where bold moves will define market leaders.

5. A Resurgence in Nuclear Energy: Meeting Critical Energy Needs

AI’s unprecedented energy demands are driving a renewed focus on nuclear power. Given our experience advising on nuclear deals, it is exciting to see such a resurgence in interest, driven by both the extraordinary power demands of data centres (see Microsoft's 20-year deal with Constellation Energy to re-open Three Mile Island Unit 1) and the continued investment in Small Modular Reactors and other advanced nuclear technologies. Data centres alone are projected to consume 9% of U.S. electricity annually by 2030, and many states will see even higher levels. Clients must explore innovative energy solutions. For companies in the energy or infrastructure space, the opportunities to capitalize on this resurgence are tremendous.

As always, we stand ready to help clients navigate these challenges and capitalise on the opportunities ahead. 

Read more from our Tech M&A team on 2024 trends:

Tech M&A: Recent "Acquihires" in the Tech Sector

Tech M&A in 2024: Insights for Bridging Valuation Gaps

Tech M&A: Key Pitfalls to Anticipate and Avoid With Deferred Consideration