Igor Kirman, Partner at Wachtell, Lipton, Rosen & Katz, along with Corporate Partners Victor Goldfeld and Lina Tetelbaum, have analyzed the significant shifts and trends in the mergers and acquisitions (M&A) landscape, as detailed in a recent Wachtell Lipton memorandum. Their insights reveal a robust and dynamic M&A market in 2025, characterized by increased deal volume, the reemergence of megadeals, and a complex interplay of economic, regulatory, and geopolitical factors.
A Year of Accelerated Dealmaking
2025 marked a significant upswing in M&A activity across the globe, far exceeding the performance of previous years. In the United States alone, M&A deal volume surged to over $2.3 trillion, representing a substantial 58% increase compared to 2024. Globally, the M&A market witnessed an impressive growth of over 42%. A key indicator of this accelerated pace was the substantial rise in large-scale transactions. The U.S. market saw four deals exceeding $40 billion in 2025, a stark contrast to the absence of such deals in 2024. This trend suggests a renewed appetite for bolder transactions, which may have been previously deemed too risky amidst prior regulatory and market uncertainties. Despite lingering concerns surrounding tariffs, inflation, and ongoing geopolitical conflicts, the M&A market concluded the year with robust momentum across a multitude of industries. Notably, while the absolute number of deals saw a decrease, the significant increase in overall deal volume was primarily driven by these larger, high-value transactions.
The reemergence of megadeals was a defining feature of 2025. Globally, 68 deals valued at $10 billion or more were announced, surpassing the previous annual high set a decade prior and more than doubling the 30 such transactions from 2024. Many of these substantial transactions were announced in the latter half of the year, as initial anxieties regarding tariffs and their potential consequences began to subside.
Among the headline-grabbing megadeals were Union Pacific’s $85 billion combination with Norfolk Southern, Teck Resources’ $69 billion merger of equals with Anglo American, and Palo Alto Networks’ $25 billion acquisition of CyberArk. This trend continued into the early months of 2026 with Paramount Skydance’s ambitious $110 billion acquisition of Warner Bros. Discovery, Sysco’s $21.9 billion acquisition of Jetro Restaurant Depot, and the $44.8 billion combination of Unilever’s Foods business with McCormick. The fact that many acquirers in these significant transactions are entities that have historically not been major participants in M&A activity underscores the current attractiveness of the dealmaking environment.
Navigating a Shifting Macroeconomic and Regulatory Landscape
The M&A landscape in 2025 was undeniably shaped by a confluence of macroeconomic, regulatory, political, and geopolitical factors. The return of President Donald Trump to the White House, coupled with Republican majorities in both houses of the U.S. Congress, signaled a shift in the approach of federal regulators. Antitrust regulatory agencies, under new leadership, adopted a different posture compared to the previous administration. Beyond antitrust, regulatory scrutiny increased in other areas, exemplified by the Federal Communications Commission’s indication that it might condition M&A transaction approvals on companies eliminating diversity, equity, and inclusion (DEI) policies.
In a significant development, the federal government has actively participated as a dealmaker, taking equity stakes, securing governance rights, and sometimes demanding economic upside to bolster critical industries such as rare earth, lithium, and chip manufacturing. A prime example is the government’s $8.9 billion investment in Intel, largely funded by the CHIPS Act, which secured a 9.9% equity stake and other rights. The U.S. government also made strategic investments to secure rare earth supply chains, acquiring equity stakes and entering into offtake and price support agreements with companies like MP Materials, USA Rare Earth, Vulcan Elements, and Trilogy Metals. Furthermore, Nvidia and AMD entered into agreements with the U.S. government to share a portion of revenues from chip sales to China in exchange for export licenses to that country for chips that were previously subject to restrictions.
Despite these positive developments, volatility and uncertainty persist. Challenges to the Federal Reserve Bank’s independence could impact interest rate trajectories. The threat of tariffs, despite recent Supreme Court rulings, remains a constant consideration, and boycotts against U.S.-based companies have gained traction amidst escalating geopolitical tensions. Nevertheless, the M&A market has demonstrated remarkable resilience, with activity levels far surpassing those of recent years.
Sector-Specific Dynamics in M&A
Several key sectors experienced notable M&A trends in 2025:
Banking Sector Consolidation
The banking sector witnessed a significant regulatory shift, with a growing consensus among U.S. bank regulators that consolidation can lead to a stronger, more efficient, and stable industry. This change was evident in quicker regulatory approvals for M&A deals. Beyond the landmark $35.3 billion acquisition of Discover by Capital One in May, 2025 saw several substantial regional bank transactions. These included the combination of Synovus and Pinnacle Financial, Huntington’s acquisitions of Veritex and Cadence, Fifth Third’s acquisition of Comerica, PNC’s acquisition of FirstBank, Prosperity’s acquisitions of American Bank and Southwest Bancshares, and Mechanics Bank’s acquisition of HomeStreet. The shift in regulatory focus from micromanagement to material financial risks provided a positive outlook for acquiring and growing banking franchises. M&A activity also remained robust across the broader financial services sector, encompassing asset management, insurance, payments, and fintech.
Technology M&A and the AI Revolution
Technology M&A once again dominated the global M&A landscape, accounting for nearly 19% of deal volume in 2025, with a 65% increase in activity from the previous year. The intense competition for Artificial Intelligence (AI) resources fueled a surge in "acquihire" transactions, where larger tech companies absorb smaller startups to expand their talent pools, often employing novel deal structures. However, in early 2026, the Federal Trade Commission (FTC) signaled an increased scrutiny of such transactions and other employee acquisition strategies, aiming to prevent companies from circumventing merger review processes. AI companies also engaged in large, complex transactions for computing power, with partnerships between OpenAI and companies like Broadcom and AMD being prominent examples. The escalating focus on AI is also fostering convergence between the technology, industry, and energy sectors, with hyperscalers such as Alphabet, Microsoft, and Amazon projected to invest over $100 billion each in AI infrastructure by 2027. This activity has spurred legal innovation, including the recapitalization of OpenAI’s for-profit organization into a public benefit corporation overseen by its nonprofit foundation.
Media, Entertainment, and Telecommunications
The media, entertainment, and telecommunications sectors contributed a significant 11% to global deal volume in 2025. However, anticipated headwinds, including concerns about a technology market bubble and increased scrutiny from both domestic and international regulators, could potentially temper this momentum. The media and entertainment sector was the stage for one of the most intense takeover battles in corporate history. Paramount Skydance launched an unsolicited tender offer, accompanied by litigation and a proxy fight, ultimately succeeding in a bid to acquire Warner Bros. Discovery for $110 billion, surpassing Netflix’s initial $82.7 billion deal following a competitive auction. Another notable transaction was Nextstar Media Group’s $6.2 billion acquisition of TEGNA, aimed at creating one of the largest local TV broadcasters in the country. This deal subsequently faced challenges from state attorneys general and private litigants seeking to block the integration of the two businesses.
Healthcare M&A
Healthcare deals represented nearly 9% of global M&A volume in 2025, with transactions of all sizes making headlines. Abbott Laboratories’ $21 billion acquisition of Exact Sciences underscored the significant interest in cancer detection and diagnostic technologies. Pfizer’s $10 billion acquisition of Metsera also garnered attention, particularly due to Novo Nordisk’s competing bid, though Pfizer ultimately prevailed. The consideration paid by Pfizer included a contingent value right (CVR), reflecting a broader trend in 2025. For instance, in June 2025, Carlyle and SK Capital finalized their acquisition of bluebird bio, offering tendering shareholders a choice between all-cash consideration or a lower cash payment at closing coupled with a CVR tied to specified net sales milestones. Similarly, Blackstone and TPG’s acquisition of Hologic involved a CVR contingent on revenue thresholds for Hologic’s Breast Health business in FY 2026 and 2027. CVRs, when carefully structured, serve as a mechanism to bridge valuation gaps in public company transactions, and they continue to be predominantly observed in healthcare deals, with nearly half of U.S. public company M&A targets in the healthcare sector in 2025 incorporating a CVR component.
The Evolving Landscape of Activism and Governance
Hedge Fund Activism on the Rise
Hedge fund activism remained consistently elevated in 2025, both domestically and internationally. In the United States, activist campaigns saw an approximate 23% year-over-year increase, with the U.S. continuing to be the most active jurisdiction, accounting for over half of all global activity. The Asia Pacific region also experienced a rapid surge in activism, particularly in Japan and South Korea, exceeding historical levels. Key areas of shareholder pressure included business strategy, operations, capital allocation, corporate structure, CEO succession, M&A, asset monetization, and stock buybacks, with operational matters drawing particular attention amidst ongoing geopolitical volatility.
Activists increasingly pursued governance changes to garner support from proxy advisory services and governance-focused investors, seeking board representation—ranging from a few board seats to outright control. They also increasingly targeted top management for removal and replacement with their own sponsored candidates. The prevalence of campaigns explicitly targeting CEOs rose significantly, impacting even prominent executives of large corporations. A record 32 U.S. CEOs resigned in 2025 within one year of an activist campaign. M&A activism, in particular, accelerated in the second half of 2025, appearing in 54% of campaigns in the latter half of the year, compared to 35% in the first half. In fact, 61% of fourth-quarter 2025 activism campaigns were driven by an M&A thesis, marking a five-year high.
While established activists maintained their prominent role in the 2025 proxy season, first-time activists constituted approximately 50% of all activists and 27% of campaigns, mirroring the record levels seen in 2024. This underscores that no company, regardless of size, success, or age, is immune to activism. Activists are increasingly collaborating, or "swarming," marquee mega-cap companies to advance M&A or breakup theses. Furthermore, activists are demonstrating persistence, with some campaigns spanning multiple years, indicating they return better prepared and potentially more effective. Companies that successfully resolved activist situations in 2025 but continue to underperform may face renewed activism focused on implementing strategic alternatives reviews.
Recent trends in activism include:
- SEC Guidance on Schedule 13D and 13G: In February 2025, the SEC clarified that investors seeking to influence a company’s specific measures may lose their "passive investor" status, disqualifying them from filing a Schedule 13G. This has led some shareholders to exercise more caution in initiating conversations, particularly on sensitive topics. Boards are thus encouraged to proactively engage with investors, solicit their perspectives, and set meeting agendas.
- Updates to Rule 14a-8 Shareholder Proposals: In November 2025, the SEC’s Division of Corporation Finance announced that for the 2025-2026 proxy season, it would not substantively respond to no-action requests regarding the exclusion of shareholder proposals under Rule 14a-8, effectively deferring such decisions to companies.
- SEC Exemptive Order on Tender Offers: In April 2026, the SEC issued an exemptive order allowing certain tender offers to remain open for a minimum of 10 business days, provided they meet specific criteria, including offering only cash at a fixed price and announcing any material changes in advance of the offer’s expiration.
- The Role of Proxy Advisors: Proxy advisory firms faced increased legislative and regulatory scrutiny. An Executive Order in December 2025 aimed to enhance oversight and restore public confidence in the industry, mandating SEC review of rules related to proxy advisors, shareholder proposals, and the potential for investment advisers to act as a "group."
- More Engaged Retail Investors: Companies are exploring avenues to engage with their retail shareholder base, including auto-voting programs, aiming to garner support for board and management recommendations. The SEC confirmed its non-enforcement stance on ExxonMobil’s retail voting program, subject to certain conditions.
M&A Activism: A Driving Force
A significant portion of shareholder activism is directed towards M&A. In Q4 2025, 61% of campaigns had an M&A thesis, the highest proportion in five years. The primary forms of M&A activism include campaigns to sell the entire target company, drives for company breakups or divestitures of non-core businesses, and efforts to scuttle or improve existing deals. "Sell the company" campaigns were a key driver, reflecting activists’ push for transformative M&A as an alternative to perceived stalled or failed standalone strategies. Notable M&A-focused campaigns in 2025 included Barington Capital’s advocacy for a breakup of business units at Matthews International and Dalton Investments’ push for a spin-off of Fuji Media Holdings’ real estate business.
The Evolving Governance Landscape
Corporate governance continues to be shaped by scrutiny of stakeholder relations, board composition, and overall governance practices. The growth of the stakeholder-centric corporate governance model, as articulated in Martin Lipton’s "New Paradigm," reimagines governance as a collaborative exercise among all corporate stakeholders. This shift is a response to the evolution from a board-centric to a shareholder-centric model and aims to mitigate short-termism by balancing stakeholder interests for sustainable long-term value creation.
The New Paradigm has emerged amidst the significant growth of passive investing, with large asset managers like Vanguard, BlackRock, and State Street holding substantial stakes in many S&P 500 companies. These firms’ long-term investment horizons and broad portfolios necessitate robust investment stewardship focused on systemic risks, including sustainability, cybersecurity, and human capital. However, the past few years have seen increasing politicization and backlash against Environmental, Social, and Governance (ESG) considerations. The term "ESG" itself has seen a decline in usage amid cultural and political clashes. Anti-ESG legislation in several states has created hurdles for investment firms, and many institutional investors have become more reserved on ESG matters. In response to President Trump’s executive orders on DEI, ISS and Glass Lewis announced a halt or flagging of diversity considerations in their voting recommendations. The SEC also ended its defense of climate disclosure rules adopted in 2024.
Key trends in corporate governance include:
- Semi-Annual Versus Quarterly Reporting: The SEC is exploring a proposal to allow companies to opt into semi-annual reporting, potentially freeing up management to focus on long-term value creation.
- The "Big Three" Shift Stewardship Approach: BlackRock, Vanguard, and State Street have split their proxy voting teams to accommodate a more nuanced approach and reflect clients’ diverse stewardship philosophies. Boards are advised to engage directly with key investors to understand their voting patterns.
- Ongoing Dominance of Delaware: Despite efforts by Texas and Nevada to attract incorporations with business-friendly legislative changes, Delaware is likely to remain the dominant state of incorporation due to its established corporate law, specialized judiciary, and shareholder protections. Delaware has responded to these challenges with reforms, including amendments to its General Corporation Law providing safe harbors for directors and controlling shareholders.
- Continued Rise of AI: AI remained a paramount concern for all stakeholders in 2025, driving significant transactions, financings, and strategic partnerships. Boards are increasingly expected to integrate AI expertise and understand its impact on business models and strategy.
Regulatory Trends Shaping M&A
U.S. Antitrust Enforcement
The beginning of 2025 anticipated a more favorable regulatory environment for dealmaking under the Trump administration, an expectation that has largely materialized. New leadership at the FTC and DOJ signaled a return to more established antitrust enforcement practices, with a commitment to improving transparency and streamlining the merger review process. The agencies have resumed a willingness to settle merger reviews with negotiated remedies, leading to a decline in court challenges. However, this does not imply a relaxation of enforcement, particularly in sectors like technology and healthcare, which are central to the administration’s economic agenda.
The administration has exerted more direct supervision over antitrust agencies, aligning their activities with policy priorities. This was evident in the dismissal of two FTC Democratic Commissioners, a case currently pending before the U.S. Supreme Court that could have significant implications for agency independence. Gail Slater stepped down as AAG of the DOJ’s Antitrust Division, reportedly due to tensions over merger enforcement decisions. The agencies’ efforts to align with the administration’s priorities introduce ongoing uncertainty into the merger review process.
A notable shift has been the renewed openness to settling merger reviews with negotiated remedies. The DOJ entered into five settlements in 2025, all involving structural remedies. Notable cases include the resolution of challenges in Hewlett Packard Enterprises/Juniper Networks and UnitedHealth/Amedisys. The FTC also settled four merger investigations, with Synopsys/Ansys and Alimentation Couche Tard/Giant Eagle involving structural remedies. While Chairman Ferguson expressed a preference for structural remedies, the FTC also entered into settlements involving non-divestiture remedies in Boeing/Spirit AeroSystems and Omnicom/Interpublic Group.
Despite this pragmatism, the agencies remain enforcement-minded and are willing to pursue court challenges. Recent challenges have focused on the loss of direct competition between merging parties, indicating a return to traditional theories of harm. The FTC challenged three transactions, including GTCR/Surmodics, Edwards Lifescience’s acquisition of JenaValve (which the FTC successfully blocked), and Henkel’s proposed acquisition of Liquid Nails. The DOJ’s litigation docket was lighter, with one challenge to Hewlett Packard Enterprises that was later settled and the dropping of the American Express GBT/CWT case.
The agencies continue to explore expansive theories of harm, including labor market competition, and have retained the 2023 Merger Guidelines. While private equity may benefit from a more favorable environment, both the FTC and DOJ have pledged vigorous enforcement in the technology sector. The FTC has increased scrutiny of "acquihire" transactions to prevent circumvention of merger review. In the healthcare sector, enforcement remains a priority, with two of the FTC’s three merger litigations in 2025 involving this industry.
The HSR premerger notification program underwent a significant overhaul, but the new rules were challenged and subsequently vacated by a district court. The FTC appealed the decision and reinstated the prior HSR form. State attorneys general have also become increasingly assertive in merger reviews, with some states adopting universal premerger notification regimes.
National Security Considerations
Regulatory scrutiny of foreign investments for potential national security concerns has intensified globally. In the U.S., the Committee on Foreign Investment in the United States (CFIUS) has expanded its jurisdiction, particularly over real estate transactions involving foreign investors. New rules effective December 2024 broadened CFIUS’s scope concerning proximity to military installations. Successive administrations have also increased oversight of companies in telecommunications and other sensitive industries with potential ties to China.
The Foreign Investment Risk Review Modernization Act (FIRRMA) introduced mandatory notification requirements for certain transactions involving U.S. businesses associated with critical technologies, infrastructure, or sensitive personal data, especially where a foreign government has a substantial interest in the acquiror. Supply chain vulnerabilities have also heightened the likelihood of close CFIUS review for investments in U.S. healthcare, pharma, and biotech companies.
While most CFIUS oppositions in recent years have involved Chinese investors and U.S. businesses in critical technologies, acquirors from all jurisdictions should carefully consider the U.S. political and national security environment. The Nippon Steel acquisition of U.S. Steel, blocked by President Biden and later approved by President Trump with significant conditions, illustrates the evolving dynamics.
While CFIUS notification remains largely voluntary, unreviewed transactions are subject to perpetual review. A strategic decision on whether to make a voluntary filing depends on assessing the risk of drawing CFIUS’s attention. Parties should establish a clear CFIUS strategy, allocate risk, and account for potentially prolonged review times. Some cross-border transactions have incorporated reverse break fees tied to CFIUS review to address non-consummation risk.
In addition to inbound reviews, the U.S. government has introduced rules prohibiting certain outbound investments by U.S. businesses in countries of concern, primarily China, related to semiconductors, quantum information technologies, and AI. The Comprehensive Outbound Investment National Security (COINS) Act largely codifies these prohibitions and notification requirements, with eventual expansion of targeted countries and industry sectors.
The European Union has also implemented a framework for screening foreign direct investments, encouraging member states to adopt similar regimes. The EU’s Regulation on Foreign Subsidies Distorting the Internal Market, effective October 2023, requires mandatory notification and review of certain acquisitions by foreign investors who have received subsidies from non-EU governments. This new screening tool is capturing more deals than anticipated, creating significant burdens for M&A transactions involving companies with an EU presence.
The M&A market in 2025 demonstrated remarkable resilience and dynamism, driven by a confluence of economic recovery, evolving regulatory landscapes, and strategic imperatives. As companies navigate this complex environment, a thorough understanding of these trends and potential challenges will be crucial for successful dealmaking and long-term value creation.
