As global markets continue to evolve and adapt to new technologies, consumer trends, and environmental challenges, several industries are experiencing a surge in M&A activity. Whether it’s leveraging technological advancements or consolidating fragmented markets, here are the top six sectors that are expected to see the most M&A action in 2024 and 2025:
1. Home Services
The home services industry has seen a consistent uptick in M&A activity as consumers demand more efficient and specialized home improvement and maintenance services. From HVAC and plumbing to home security and pest control, companies are consolidating to expand their geographical footprint, streamline operations, and offer more comprehensive service packages. The post-pandemic home renovation boom has also made this sector more attractive, with homeowners investing in long-term improvements.
Investors and private equity firms see this space as having high scalability potential, especially for companies using franchise models, which offer the opportunity for rapid regional or national growth(Homepage) (Livingstone).
2. Technology (AI, Cloud, and Cybersecurity)
Technology remains the frontrunner in M&A activity, particularly in areas like artificial intelligence (AI), cloud computing, and cybersecurity. Companies across industries are aggressively acquiring AI firms to incorporate machine learning and automation into their operations. Cloud services are also in high demand as businesses continue to shift to digital operations and remote work environments. Meanwhile, the ever-growing threat of cyberattacks is pushing businesses to invest heavily in cybersecurity firms to safeguard their digital assets.
In 2024 and 2025, expect to see more acquisitions as companies race to adopt new technologies that offer competitive advantages in automation, data processing, and cybersecurity(McKinsey & Company)(PwC).
3. Storage Facilities
The self-storage industry has emerged as a consistent performer in the M&A landscape, primarily due to increased urbanization, e-commerce growth, and the need for both individuals and businesses to store inventory and personal belongings. Storage facilities offer high cash flow potential, low overhead, and are generally recession-resistant, making them an attractive option for investors. With limited land availability in urban areas, established storage facilities in key locations are ripe for acquisition, especially by private equity and REITs (Real Estate Investment Trusts).
This trend is expected to continue well into 2024 and 2025 as more storage operators consolidate to meet rising demand and improve efficiency(Homepage)(Livingstone).
4. Automotive and Electric Vehicles (EVs)
The automotive industry, particularly the electric vehicle (EV) sector, is set to be a hotbed of M&A activity. As automakers transition to EVs, companies are seeking acquisitions to secure battery production capabilities, autonomous driving technology, and critical minerals like lithium and cobalt. The rapid advancements in EV technologies, coupled with tightening environmental regulations, have created a perfect storm for consolidation in the industry.
Companies are also partnering with or acquiring startups that specialize in EV charging infrastructure, further fueling the shift toward sustainable transportation. Expect major automakers and tech companies to lead the charge in M&A deals throughout 2024 and beyond(PwC)(Exploding Topics).
5. Consumer Goods and eCommerce
Consumer goods and eCommerce sectors are undergoing rapid consolidation, especially as companies look to scale through digital platforms. In particular, roll-up strategies, where firms acquire smaller eCommerce brands to create economies of scale, are on the rise. Amazon third-party sellers are a prime target for these acquisitions, allowing companies to streamline supply chains, lower costs, and dominate niche markets.
Private equity and strategic buyers are particularly active in this space, as they seek to capture more market share in the digital economy. With continued growth in online shopping and consumer preferences for convenience, expect this sector to be a leading player in M&A over the next two years(Exploding Topics).
6. Business Services
The business services sector, which includes outsourcing, IT support, human resources, and other professional services, has been an attractive area for M&A due to its “asset-light” nature. These companies rely more on human capital than physical assets, making them easier to scale and more profitable for acquirers. The outsourcing trend, in particular, continues to drive consolidation as companies look to cut costs and focus on their core business functions.
Private equity firms and corporate buyers are targeting mid-market companies in this sector to capitalize on growing demand for outsourced solutions. The business services sector is expected to remain one of the most active in terms of M&A deal volume through 2024 and 2025 (Livingstone)(Capstone Partners).
Conclusion
M&A activity is set to soar across a variety of sectors as companies look to grow through acquisitions rather than organic means. From technology and EVs to home services and storage facilities, businesses are using M&A to secure market share, access new technologies, and streamline operations. For investors and companies alike, 2024 and 2025 offer exciting opportunities in these dynamic industries.
Sources:
- Livingstone Partners: Business Services M&A Trends
- Deloitte: 2024 M&A Trends Survey
- PwC: Global M&A Industry Trends
