2025 Mergers and Acquisitions Trends for Financial Advisors: Analyzing the Rebound

Why are deal values rising while the number of M&A transactions is falling?

This defines the current state of mergers and acquisitions. After a cautious 2023 and a mixed 2024, the M&A market is realigning in 2025. According to PwC, total deal value rose 15% between the first half of 2024 and the first half of 2025, while deal volume declined 9%. The data points to a shift in strategy—fewer transactions, but with greater scale, clarity, and capital commitment.

In June 2025, M&A activity across the financial services sector reflects concentrated investment, especially from private equity. Transactions are increasingly structured around long-term value creation, operational efficiency, and platform growth. Wealth management and asset management remain key areas of activity, where acquisition strategy is being shaped by client retention goals, regulatory shifts, and pressure to scale.

For financial advisors and firms involved in dealmaking, M&A is no longer a growth lever, but a structural necessity. This article breaks down current transaction patterns, outlines the drivers behind the rebound, and provides guidance on how firms should approach decision-making in the 2025 M&A environment.

Market Pulse: What’s Moving the Needle in 2025 Mergers and Acquisitions

The 2025 M&A environment reflects a recalibration, not a full recovery. Financial markets are still grappling with uncertainty, but dealmakers are focusing their energy and capital on fewer, more impactful transactions. This marks a distinct shift from the higher-volume, scattershot approach that defined earlier market cycles. Selectivity is up, timelines are longer, and the focus has turned to structural efficiency and durable value.

A Focus on High-Value Strategic Transactions

The defining characteristic of the 2025 M&A market is a pronounced shift toward high-impact, strategic transactions. Instead of a high volume of smaller deals, the market is powered by significant capital being deployed into fewer, more meaningful acquisitions. This trend is clearly evidenced by a 19% year-over-year increase in billion-dollar deals, according to data from EY-Parthenon. This surge in large-scale M&A demonstrates that well-capitalized buyers are prioritizing opportunities with clear and compelling value creation pathways, commanding premium attention and investment.

U.S. Market Shows Robust M&A Activity

The United States has emerged as a particularly bright spot in the global M&A environment. U.S. transactions valued at over $100 million saw a remarkable 39% increase in May 2025 compared to the prior month and a 68% surge year-over-year, as reported by EY-Parthenon. This significant growth is largely fueled by megadeals, signaling strong confidence among dealmakers in the domestic economy. The market activity across the U.S. points to a robust appetite for acquisition, even as other global regions proceed with more caution.

A Climate of Caution Persists

Despite the positive market indicators, a degree of economic uncertainty continues to influence M&A strategies. Issues such as recent tariff implementations, persistent questions around interest rates, and the slow pace of deregulation act as potential brakes on momentum. Both PwC and KPMG have noted that these variables could temper the M&A rebound, prompting some buyers and sellers to adopt a wait-and-see approach. This cautious optimism defines the current market dynamics, where strategic planning must account for potential market volatility.

Core Forces Shaping M&A in the Financial Sector

Several powerful forces are converging to define the mergers and acquisitions landscape for financial advisors this year. From the immense pressure on private equity firms to deploy capital to the reset in business valuation expectations, these elements are creating a unique set of circumstances. Understanding these drivers is crucial for any advisor contemplating a transaction in the current M&A environment.

The Private Equity Overhang: A Ticking Clock

Private equity firms are under considerable pressure to act. With over $1 trillion in undeployed capital, often referred to as "dry powder," and 47% of PE-owned portfolio companies having been held since 2020, the need to generate returns for investors is acute (PwC, Vistage). Morgan Stanley analysis suggests that these firms must accelerate exits to return capital and successfully raise new funds. While take-private deals surpassed $200 billion in 2024, the broader exit market for private equity has been sluggish, creating a powerful incentive for increased M&A activity in the second half of 2025.

Interest Rates and the New Financing Reality

Financing conditions remain a central factor in the feasibility of M&A transactions. Persistently high interest rates mean that fewer deals are financially viable under traditional lending terms. This has led to a significant shift in how deals are financed. Private credit is increasingly stepping in to fill the void left by conventional banks, offering more flexible and tailored financing structures. This trend, highlighted by Vistage and RSM, is becoming a strategic advantage for financial buyers who can secure this form of capital.

The Great Valuation Reset: An Adjustment for Sellers

The era of peak valuation multiples has passed, forcing a recalibration of expectations among sellers. PwC data indicates that median global M&A multiples have declined to 10.8x EBITDA. While U.S. valuations have held up more resiliently compared to those in Europe and Asia (EY, PwC), a significant gap between buyer and seller expectations remains. The EY CEO Outlook Survey found that this valuation mismatch is a primary concern for 71% of CEOs, making it a critical point of negotiation in nearly every transaction.

Artificial Intelligence as a Strategic Deal Driver

Artificial intelligence is rapidly becoming a key consideration in M&A strategy. In May 2025, AI-related deals constituted 14% of all billion-dollar M&A transactions, according to EY. While many AI applications within financial services are still considered niche, the technology's potential to drive efficiency, scale, and technological superiority is a powerful motivator for consolidation. PwC and Vistage report that the desire to acquire advanced AI capabilities is increasingly influencing M&A decisions as firms seek a competitive edge through digital transformation.

Geopolitical and Regulatory Wildcards

The broader geopolitical and regulatory landscape continues to cast a shadow over the M&A market. Factors such as U.S. tariffs, fluctuating inflation signals, and policy uncertainty tied to an election year are causing some dealmakers to delay decisions, according to Morgan Stanley and KPMG. Furthermore, PwC notes that government debt in OECD countries is projected to reach $59 trillion in 2025. This could potentially lead to higher interest rates and constrained access to capital, adding another layer of complexity to the global financial markets.

Sector View: Wealth Management & Financial Institutions

The drivers of mergers and acquisitions vary significantly across the different segments of the financial services industry. In wealth management, the pressure to scale is fueling a wave of consolidation, while asset management is seeing larger, more transformative moves. Meanwhile, banking and insurance M&A is being shaped by distinct strategic imperatives, from geographic expansion to market specialization.

Wealth Management and RIA Consolidation Trends

The Registered Investment Advisor (RIA) space remains a hotbed of M&A activity. Smaller firms, particularly those with assets under management between $500 million and $3 billion, are prime targets. According to RSM and BNY Pershing, these firms face mounting pressure from rising regulatory overhead and the need for greater scale to remain competitive. Despite the consolidation trends, the RIA sector continues to exhibit significant growth, with BNY Pershing reporting that for every one RIA that is sold, two new ones are created. The acquisition of Commonwealth by LPL for $2.7 billion, highlights that buyers are prioritizing firms with established trust, robust technology platforms, and strong teams.

Asset Management: Fewer Deals, Bigger Impact

In the asset management sector, M&A is the primary strategy for firms looking to expand their capabilities, particularly into high-growth areas like private credit and alternative investments, according to McKinsey. The M&A trend here is characterized by fewer, but larger and more strategic, transactions. However, dealmaking can be challenging. BNY Pershing notes that high valuations continue to create friction, with motivated buyers often finding it difficult to reach terms with reluctant sellers, leading to a more measured pace of activity compared to the wealth management industry.

Banking and Insurance M&A Dynamics

Mergers and acquisitions in the banking sector are largely driven by the pursuit of geographic expansion and cost-saving synergies, as reported by McKinsey and RSM. Banks are looking to acquire market share in new regions and streamline operations to improve profitability. In the insurance sector, the consolidation of brokerages continues, albeit at a slower pace than in previous years. KPMG reports that demand is particularly strong in the Excess and Surplus (E&S) markets, where specialized expertise can command a premium valuation.

Cross-Border Activity: The U.S. as a Magnet for Investment

In the global M&A market, the United States continues to be a primary destination for foreign investment. Buyers from Europe and Japan, in particular, are actively seeking U.S. firms to access growth opportunities and tap into the country's leadership in AI and technology, according to Morgan Stanley and PwC. This inbound activity provides a steady stream of capital and potential buyers for U.S.-based financial services firms.

Conversely, U.S. dealmakers are demonstrating a more domestic focus. Rising geopolitical friction and economic uncertainty in overseas markets have led many American companies to prioritize acquisitions within their own borders, as noted by PwC and RSM. This inward-looking M&A approach is shaping the flow of capital and creating a more competitive environment for domestic transactions, reinforcing the strength and attractiveness of the U.S. market for both buyers and sellers in 2025.

What Buyers and Sellers Should Do Right Now

The current M&A environment requires a tailored approach, whether you are considering selling your firm or looking to acquire another. The market dynamics of 2025 favor preparation, strategic clarity, and a realistic understanding of value. Acting decisively, with a well-defined plan, will be the key to success.

For Sellers: A Focus on Preparation and Fit

Getting your valuation right is paramount. It is crucial to remember that multiples alone do not determine price; sustainable cash flow is the true driver of value. Partnering with an industry-specific valuation expert, such as Succession Resource Group, can provide an objective and accurate assessment based on real-time deal data. Beyond the numbers, knowing your buyer fit is essential. The long-term success of a merger often depends more on cultural alignment and a well-executed integration plan than on the headline price. Use 2025 as a critical preparation period. While deal volume is lower, this is the ideal market timing to organize your due diligence documents, clarify your post-transaction goals, and define the "why" behind your decision to sell.

For Buyers and Aggregators: Strategy and Integration are Key

Successful buyers in this market will lean into strategic fit. An approach that is thematic, focusing on acquiring adjacent capabilities rather than just accumulating assets under management, is more likely to lead to long-term value creation. Integration is the ultimate X-factor. PwC research emphasizes that deal success is overwhelmingly determined by how well people, clients, and systems are integrated post-transaction. Finally, access to private credit has become a significant strategic edge. With traditional bank financing more constrained, firms that can leverage non-bank lending options are better positioned to win smarter deals and execute their M&A strategies at scale.

Advisor Legacy: Your M&A Strategy Partner in 2025 and Beyond

The mergers and acquisitions market is clearly in a year of transition. While the M&A rebound is proceeding slowly, the market indicators point toward a strengthening environment for dealmakers who are prepared to act. The fundamentals of a successful transaction have not changed; clarity on objectives, speed of execution, and a sound strategy remain the cornerstones of value creation. Firms that focus on quality, cultural fit, and operational readiness will be best positioned to capitalize on the returning momentum in the second half of 2025 and beyond.

At Advisor Legacy, we work with financial advisors to evaluate, structure, and execute successful M&A strategies. Whether you're selling, acquiring, or planning a transition, our valuation expertise and succession planning support help you move forward with confidence. Start with our free assessment and receive a personalized coaching session from one of our M&A experts.