Global mergers and acquisitions (M&A) activity is heating up again in 2025, with dealmakers moving quickly to capitalize on stabilizing interest rates, pent-up capital, and new sectoral opportunities.
However, geopolitical risks, including trade policy uncertainty in the US, ongoing war in Ukraine, and right-wing electoral surges in countries like Germany and France, are posing significant hurdles for investors. As economic and political volatility casts shadows over these regions, M&A players are re-evaluating the risks in cross-border mergers and acquisitions.
Rowan Bamford, president of Liberty GTS, a leading M&A insurance provider, said cross-border deals inherently carry more risks than domestic transactions, which could drive opportunities for warranty & indemnity (W&I) insurance, also known as transactional risk insurance.
“M&A during January and February was slower than we expected in the US, but we don’t see that as a sign of a broader trend. We think it’s just the market taking a moment to digest and recalibrate in light of potential policy shifts,” he said.
“However, Europe is a completely different matter. Cross-border activity is the norm there, and that brings a whole different set of variables. You can’t just look at the target company; you also have to consider the macroeconomic conditions in both the seller’s country and the buyer’s country. It’s a more complex equation overall.”
Investor caution is especially pronounced in North America, where political tensions have put global dealmakers on edge. Amid heated rhetoric in the US around tariffs, economic nationalism, and trade imbalances, buyers could take a wait-and-see approach, Bamford said.
However, the same forces are playing out in reverse, with American buyers now thinking twice about European targets as the continent wrestles with its own political challenges.
In this light, the UK has emerged as a relatively attractive market, particularly compared to continental Europe. With capital needing a home and uncertainty clouding other regions, London and its surroundings are looking increasingly viable.
"The UK is relatively stable. Interest rates have dropped and don’t look likely to change significantly over the next 5–10 years,” said Bamford. “UK real estate is attractive, and there’s a push to make the UK a technological hub. So, if there’s cash, say, from Asian or US investors, the UK is an easy place to put it.”
Language is also a big driver. “Why add language complications during due diligence if there’s no significant value premium in continental Europe?” Bamford said. “It’s easier to transact in the UK.”
Attention is also turning toward Asia, as some investors eye it as a counterbalance to instability in the West. Investment capital, once concentrated in Southeast Asia, has moved to new hot spots like China and India, according to Bamford. However, sector-specific plays are also active in Southeast Asia, from oil and gas in Indonesia to food in Thailand and the Philippines.
"We believe—and not just my group, but broadly across the market—that Asia will be the major driver of insurance premium growth in the medium term," Bamford said.
In the backdrop of the global M&A shuffle, the W&I insurance market itself is undergoing a correction. Rates have fallen in recent years, and Bamford believes pricing has bottomed out. "The driver for dropping rates has been the wave of new entrants in the MGA space,” he said.
These new players, eager to establish themselves, drove prices down aggressively. However, that phase may be ending. Reinsurance markets have started pushing back, demanding better returns and tighter underwriting.
Bamford noted that a shake-out among new entrants could force a reset on pricing, returning the market to sustainable levels. "Many are struggling to get their capital renewed," he said.
"There’s a lot of noise from capital providers to MGAs saying they need better returns per risk. I wouldn’t be surprised if 10–20% of MGAs exit the market because they’re no longer viable.”
