Market insights to inform your board's decisions this quarter

This article is based on the Deal Drivers: HY 2025 Spotlight by Datasite and Mergermarket.

After a whirlwind first half of 2025, European dealmaking appears to be catching its breath. But what lies beneath the surface of this pause, and what does it mean for board decision-making in the months ahead?

The European dealmaking landscape has cooled. Total deal value dropped by 15% compared to H1 2024, and the number of deals edged down too. But that’s not the full picture. Behind the dip is a market recalibrating, responding to economic shifts, geopolitical tensions and strategic caution.

Here’s what your board needs to know.

Why are deal values falling?

The headline numbers point to a slowdown. European deals totalled $351bn in the first half of 2025, down 15% year-on-year. Volume also fell slightly, with 4,706 transactions recorded.

So, what’s driving the dip?

Uncertainty around interest rates: Inflation may be easing, but central banks have held back on rate cuts. The result? Financing remains expensive, and some deals have been paused.
Fewer large-scale transactions: The market has seen a drop in blockbuster deals, with a few high-profile transactions postponed or scrapped altogether.

This signals a strategic pivot. Many companies are shifting away from high-stakes bets and towards more measured, value-driven plays. For boards, it’s a moment to rethink growth strategies, assess capital allocation and recalibrate risk.

Which sectors are driving dealmaking, and which are pulling back?

The dealmaking picture varies dramatically by industry.

• Industrials and chemicals stood out as the only sector to grow in both value and volume. Deal value rose 8% to $61.2bn, and volumes increased by 3%
• Energy, mining and utilities, and technology, saw sharp pullbacks. Deal values dropped 44% and 36% respectively compared to H1 2024

This shift suggests boards are now more selective, favouring stability over novelty. Pandemic-era urgency and digital hype cycles have given way to grounded strategies rooted in long-term value.

Is cross-border dealmaking slowing?

Yes, and noticeably so: 

• Inbound deal value fell by 18%
• Outbound activity dropped by 34%

What’s behind the retreat?

• Geopolitical complexity is rising, making approvals and negotiations more cumbersome
• Protectionist policies are becoming more common in some jurisdictions
• Currency fluctuations have added layers of risk for cross-border buyers

This means international expansion, while still a strategic priority, demands a higher level of diligence and flexibility. Boards will need to weigh timing and jurisdictional risk carefully.

Which regions are leading the pack?

Not all markets have followed the same trendline. Here’s how key European regions performed:

• DACH (Germany, Austria, Switzerland): Deal value climbed 18% year-on-year, even as volume fell 11%
• France: Steady performance, with both value and volume flat
• Benelux: Significant drop in both deal value and activity
• Nordics: Deal value plummeted 54%, but volume slipped just 4%, suggesting a pivot to smaller, less capital-intensive deals
• Italy and Spain: Both experienced sharp declines in value, though deal volume held up better

In short, dealmaking is becoming increasingly localised. Boards will need to understand the nuances of each market, especially when evaluating regional or cross-border opportunities.

What’s happening in private equity?

Private equity (PE) has pulled back, but it’s still in the game. PE made up 37% of Europe’s deal volume in H1 2025, down slightly from last year. A few trends stand out:

• Exit activity has slowed, with many firms holding assets longer and waiting for better market conditions
• New deals are more targeted, often focussed on bolt-on acquisitions or strategic add-ons
• Dry powder remains high, meaning firms still have capital to deploy but are applying it more selectively

For boards exploring PE partnerships, this signals longer timelines, tougher negotiations and increased scrutiny on valuation and governance.

What should boards expect in the tail end of 2025?

Despite the slower pace so far, there’s cautious optimism in the market. Key triggers could reinvigorate dealmaking in the months ahead:

• Central banks may begin to lower interest rates
• More stable valuations could unlock previously delayed deals
• Geopolitical conditions may stabilise, or at least become more predictable

This points to a second half shaped by opportunity for those ready to move decisively. Boards that stay agile, well-informed and clear on their growth priorities will be better positioned to seize it.

Make better decisions during times of uncertainty 

Dealmaking in 2025 is more considered and less reactive. The big moves may have paused, but they haven’t disappeared. For boards, this is a time to act with intention, guided by strategic clarity and supported by the right tools.

Sherpany helps boards and executive teams to enhance the speed and quality of strategic decision-making. From investment discussions to strategic reviews, our solution empowers confident, well-prepared decisions, and timely action. With structured meeting processes and secure collaboration, your board can stay ahead of the curve, even when the market isn’t.

Book a free consultation today and find out how Sherpany can support better boardroom decisions for your organisation.