Buyers take the lead in shifting M&A market

The European M&A market remained strong in 2024 despite ongoing political and economic challenges. This is according to the latest annual European M&A Study by global law firm CMS.

The Study offers insights into 582 M&A deals CMS advised on in 2024. The study identifies a buyer-friendly shift in deal structuring, with the increased use of purchase price adjustments (PPA) and earn-outs, counterbalanced by a rise in warranty & indemnity (W&I) insurance — typically a seller-favourable trend.

Key findings and takeaways
The key findings of the CMS European M&A Study are:

• Pricing & structuring: Buyers play hard on value protection
  Purchase price adjustments (PPAs) surged, reflecting buyers’ push for financial security amid market fluctuations. Earn-outs gained traction, particularly in politically sensitive sectors like energy and technology, where regulatory uncertainty is a key concern.
• Risk allocation: Buyers demand greater protection
  MAC (Material Adverse Change) clauses are being deployed more frequently, particularly in transactions exposed to political shifts or regulatory intervention. Buyers also negotiated longer limitation periods for warranty claims, reinforcing a growing emphasis on deal security.
• W&I insurance: A key tool in the buyer-friendly market
  W&I insurance usage increased by 8%, fuelled by declining premiums and broader adoption across mid-sized and large transactions. The UK led the trend, with insurance playing a critical role in risk mitigation strategies.
• ESG & AI: Theory vs. reality in M&A
  ESG and AI have perhaps been two of the most talked about topics in the legal industry over the last few years. Despite this focus in the media and in the legal and sector press, our data suggests that ESG aspects and the adoption of AI tools have yet to become a fundamental component of M&A.

Confidence in an evolving market
2025 is set to bring new opportunities for strategic investors due to a stabilising M&A deal flow and improving debt markets. However, buyers must remain agile, balancing market optimism with heightened due diligence and regulatory awareness.

Louise Wallace, Head of the CMS Corporate/M&A Group, says:
"M&A isn’t just about transactions – it’s about strategy. Our latest Study captures the key dealmaking trends shaping 2025 and beyond, equipping clients with the insights they need to navigate complexity with confidence."

Roman Tarlavski, Partner Corporate/M&A at CMS in Amsterdam, adds:
"Despite improvements in business confidence and key fundamentals, market conditions remain challenging and recent geopolitical developments temper M&A sentiment. These conditions create opportunities for companies able to navigate the challenges mainly in resilient sectors such as technology, industrials, and healthcare. Our Study is an instrument to assist them in that journey."

Read the full CMS European M&A Study 2025 here: CMS European M&A Study 2025: Market Trends & Insights | CMS Law