2025 M&A Outlook for Professional Services Firms
By: Sam Baird – President – Masterworks Capital
Uncertainty is common in the mergers and acquisitions (M&A) industry. Between the 2020 pandemic, an unpredictable economy, and a newly elected administration, feeling unsure is only natural. Hope is on the horizon, however, as the M&A landscape is poised to rebound in 2025, following a period of market correction and realignment. Professional services firms should take note of the increasing deal volume and shifting industry priorities.
Industry leaders are picking up on this and positioning themselves for a big year. Respondents of the Deloitte 2025 M&A trends survey report high levels of optimism and flexibility. In a similar fashion, the EY CEO outlook survey claims that nearly two-thirds of optimistic CEOs plan to make a deal in the year 2025.
Leaders are gearing up for a bounce back in 2025 for a number of reasons:
After a slow 2023, 2024 saw a 13 percent increase in U.S. deal activity — expect the upward trend to continue in 2025. Ernst & Young (EY) projects a 10 percent rise in total volume of M&A activity, including an 8 percent increase in corporate M&A deals. More and more companies are using M&A as a tool to enhance growth, gain competitive advantages, and strengthen market positions.
Private equity firms are playing a significant role in driving the M&A market, as they hold historic levels of capital. According to EY, private equity deals are projected to grow by 16 percent in 2025, particularly in professional services, technology, and financial advisory sectors. For business owners considering an exit strategy, private equity-backed acquisitions in 2025 could provide enticing opportunities.
Technology continues to grow in conjunction with M&A activity, 97 percent of Deloitte’s M&A Trends Report respondents utilize advanced data analytics, generative AI-driven solutions, and other modes of automation in their acquisition processes. Businesses that invest in artificial intelligence, cybersecurity, and other technological advancements are becoming prime targets for acquisitions.
2025 is sure to bring a number of valuable M&A opportunities to professional services business owners. Understanding market trends, strengthening digital capabilities, and exploring strategic partnerships will be essential to anyone operating in the M&A industry. The window for seizing M&A opportunities is open, and companies that embrace innovation and strategic expansion will thrive in this growth environment.
Key M&A Drivers in 2025
As businesses look to scale, innovate, and stay competitive, M&A has become a strategic tool for growth. According to Deloitte’s 2024 M&A Trends Report, companies are always looking to improve technological capabilities, talent acquisition, and client service offerings. Similarly, PwC’s Global M&A Trends highlights how firms are constantly using M&A to adapt to changing industry regulations, economic conditions, and market trends. For professional services firms, understanding these key drivers can help position them for strategic expansion or acquisition opportunities.
Here are three M&A drivers to explore in 2025:
Digital Transformation and AI Integration: One of the most significant drivers of M&A in professional services is the push toward digital transformation. Firms are investing in AI-powered analytics and automation tools to increase efficiency and client offerings. Firms that lack strong digital infrastructure may find themselves at a disadvantage, making M&A a strategic way to acquire innovative technologies rather than building them in-house.
Talent Acquisition and Employee Retention: Firms are using acquisitions as a way to secure skilled professionals, especially in consulting, legal, financial advisory, and IT services. According to PwC’s People in deals, companies are prioritizing acquisitions that bring in specialized expertise and talent. The ability to scale a workforce quickly through M&A is especially useful in industries where specialized knowledge is a competitive advantage. With that said, retaining talent and valuable employees is just as important to maintaining success.
Regulatory Compliance: As the M&A environment becomes more complex, so do regulatory environments, making compliance an impactful factor in M&A transactions. Governments and regulatory bodies continue to introduce new financial reporting requirements, data privacy laws, and industry-specific regulations that companies must navigate. Being up to date with your industry's specific regulations is a pivotal step in the M&A process.
Understanding the key drivers of M&A is essential for professional services firms looking to succeed in an increasingly competitive and evolving business landscape. As deal activity is set to rise in 2025, firms that embrace digital transformation, prioritize talent acquisition and retention, and actively navigate regulatory concerns will be best positioned for long-term success.
Preparing for M&A Opportunities
As M&A activity gains momentum in 2025, professional services firms must take proactive steps to position themselves for success, whether they are looking to acquire or to be acquired. The mergers and acquisitions process is complex and requires preparation, efficiency, and a clear long-term plan.
Here are three ways to prepare for M&A opportunities:
Assess Financial and Operational Readiness: Before entering an M&A transaction, firms must evaluate their financial health, market position, and scalability. A thorough internal due diligence review helps identify areas for improvement that could enhance value and attractiveness. Key steps in this process include conducting a financial audit to ensure accurate reporting, assessing scalability options, and tracking against competitors to understand market positioning.
Strengthen Digital and Technological Capabilities: Technology is an increasingly important factor in M&A decision-making. Many acquiring firms prioritize targets that have adopted AI-driven processes, cloud-based infrastructure, and data analytics capabilities. According to Deloitte, companies that integrate digital solutions into their business models tend to experience smoother transitions and increased operational efficiencies, as they provide themselves with options to pivot when necessary. Firms preparing for M&A should consider investing in technological automation, upgrading data management systems, and improving cybersecurity measures.
Developing a Clear M&A Strategy: A well-defined strategy is essential for a successful M&A transaction. Whether the goal is to expand service offerings, enter new markets, or acquire specific expertise, firms must outline clear objectives. Engaging an M&A firm early can help navigate regulatory hurdles, structure deals effectively, and facilitate seamless integration. Firms that approach M&A with a strategic roadmap will be better positioned for long-term success than those who fail to properly prepare.
As the M&A landscape continues to develop in 2025, firms that prioritize financial stability, technological readiness, and strategic planning will have the greatest advantage. The ability to assess opportunities, integrate digital solutions, and align business objectives with long-term growth will determine success in M&A transactions.
Whether looking to acquire or sell, professional services firm principals who take a proactive and structured approach will be well-positioned to thrive in an increasingly competitive and dynamic market.