Why you need a new M&A playbook

Market players working in a swiftly-evolving global landscape need a new M&A playbook, the first KPMG Bayes Business School Global Deal Sector ‘heatmap’ suggests.

Based on data provided by Bayes Business School’s M&A Research Centre, the heatmap ranks 12 sectors based on the size and number of deals in the first six months of 2025. KPMG analysts worked with Bayes colleagues to analyse the data.

The heatmap reveals that emerging players from unexpected sectors have joined more familiar rivals as competitive threats to all firms.

Dr Naaguesh Appadu, the Bayes Senior Research Fellow who worked with KPMG analysts, said: “The deal agenda is increasingly driven by the need to secure the new capabilities that will build and navigate complex ecosystems and foster collaboration.

“Businesses in different sectors are using M&A selectively – either to consolidate their core business, to expand internationally or to transform and extend their business models, with the dominant approach varying significantly by sector. This pattern is driven by deals that are closely aligned with strategic imperatives including digital transformation, geopolitical shifts and sector convergence.”

Set against this complexity and volatility, simply ranking deal activity by sector size offers little insight into which sectors are truly 'hot' for M&A-driven growth. As they make up widely varying slices of the global economy, such a league table would be relatively static.

An evolving picture

The sector heatmap instead emphasises how deal activity evolves over time – in response to the actions of buyers operating within each sector and by the type of targets within each industry. This reveals shifts in sectors’ relative importance and emerging cross-sector M&A trends. This approach produces a dynamic league table of sector dealmaking activity, illustrating the relative importance of dealmaking by sector before, during and after the pandemic.

The top three sectors are:

• High technology – which has consistently been the hottest sector over much of this period – having reclaimed top place last year off the back of the generative AI boom, after a subdued two years, it has continued to ride the AI wave.
• Banking and finance – which rose from twelfth to second with significant growth after a large dip in both deal volume and value in 2024. That rise was driven by some of the year’s largest deals in the year and a resurgence of private equity interest.
• Materials – whichrose four places to third, reflecting the strategic imperative to secure supply chains in an increasingly turbulent geopolitical environment.

Business Services, Industrials and Media sector acquirers are focussing the largest portion of M&A investment on acquiring new capabilities through cross-sector acquisitions.

Meanwhile, the finance, telecoms, healthcare, and energy & power sector acquirers are focussing 80 per cent or more of their acquisition spend on targets in the same sector, and predominantly in their home countries.

Acquirers from the materials and retail sectors are investing nearly half their acquisition dollars in international expansion – securing their positions in new markets and complex supply chains in a volatile world.

Dr Appadu said: “This multidimensional approach to deal-making reflects the complex challenges leaders face in positioning their organisations for sustainable success in an era of continuous disruption. Those involved in deals need a new M&A playbook, one that embraces both defensive and offensive strategies to thrive in this dynamic environment.

“It must equip them with the capacity to build a capability for either kind of deal, to consolidate core activities, or to embrace transformational change. They need to integrate M&A as an embedded part of the strategic planning cycle, and to excel in value creation from effective, rapid business mergers and the resulting transformation.

“The M&A landscape is no longer about merely expanding within existing markets. It's about evolving into a new entity that can navigate and thrive amidst disruption. The firms that succeed will be those that build agile M&A capabilities, embed acquisition thinking at every level, and approach value creation with the rigour of a private equity firm. The alternative is to risk becoming a target for activist investors or for acquisition.”