As 2025 unfolds, the mergers and acquisitions landscape is experiencing a profound revival. After a year of economic and political uncertainty, dealmakers are seizing opportunities to reposition—and fortify—their core businesses.

This comprehensive review delves into the key transactions shaping core holdings, the market dynamics at play, and the strategies driving value creation.

Market Rebound and Optimism

Following a challenging 2024, the M&A market is regaining momentum. With declining inflation, lower interest rates, and recovering equity valuations, deal volume is on the rise.

The BCG M&A Sentiment Index climbed to 77 in early 2025, reflecting cautious but improving optimism among global dealmakers. Consumer market deal values jumped by approximately 32%, fueled by several megadeals exceeding $5 billion each.

Yet, headwinds persist: geopolitical tensions, potential tariff shifts, and political transitions could temper the pace of transactions in certain regions.

Standout Transactions Shaping Core Holdings

Several high-profile deals this year underscore the trend of portfolio optimization. Companies are divesting non-core assets to sharpen their competitive edge and redeploy capital.

Among these, Bain Capital’s acquisition of YORK Holdings for over $5.3 billion was particularly transformative, allowing Seven & i to refocus on its flagship convenience business. Similarly, Dr. Reddy’s move into nicotine replacement therapy outside the US highlights ongoing consolidation in consumer health.

Driving Forces Behind the Deals

• Portfolio Optimization: Conglomerates divest non-core units to focus on high-margin businesses.
• Private Equity Exits: Sponsors accelerate monetization of aging portfolio companies.
• Favorable Financing: Lower rates and improved capital markets reduce transaction costs.

These drivers are amplified by a more predictable regulatory backdrop, encouraging strategic buyers to pursue transformative acquisitions.

Valuation Strategies in Action

Accurate valuation remains critical when acquiring core holdings. Firms employ a blend of methodologies to justify premium offers and forecast returns.

• Price/Earnings Multiples: Benchmarking targets against industry peers.
• Enterprise Value/Sales: Favored in high-growth or volume-driven sectors.
• Discounted Cash Flow: Estimating future cash generation under various scenarios.
• Replacement Cost Analysis: Assessing asset-heavy businesses’ book value.

By combining these approaches, acquirers can triangulate fair value and negotiate effectively—even in competitive bidding situations.

Navigating the Regulatory Landscape

2025’s antitrust environment is expected to be more traditional and predictable, removing a major barrier that stalled deals in prior years. Regulators appear inclined to approve transactions that demonstrate clear benefits to consumers and maintain competitive balance.

Nevertheless, potential policy shifts—such as new tariff regimes or changes in foreign investment rules—could introduce near-term uncertainty. Savvy dealmakers are structuring contingencies into agreements to mitigate these risks.

Sector Spotlight: Resilient Categories

Certain segments continue to draw robust interest, reflecting evolving consumer preferences and demographic trends. Notable among these are:

• Consumer Health: Ongoing spin-offs and bolt-on acquisitions energize this sector.
• Pet Care and Wellness: Ageing pet populations drive recurring demand.
• Food and Retail: Core grocery and specialty formats offer stable cash flows.

Private equity and strategic buyers alike are targeting these areas, confident in their defensible margins and long-term growth prospects.

Looking Ahead: Future Prospects

As deal pipelines fill and valuations stabilize, market participants must balance ambition with prudence. Key considerations for the coming quarters include:

• Maintaining agility to adapt to policy or macroeconomic shifts.
• Leveraging technology and data analytics to enhance due diligence.
• Fostering stakeholder alignment to facilitate smooth integrations.

By focusing on disciplined execution and strategic clarity, organizations can turn M&A into a powerful engine for growth and resilience.

Conclusion

The resurgence of M&A activity in core holdings signals renewed confidence among corporates and investors. With careful planning, rigorous valuation, and awareness of regulatory dynamics, now is an opportune moment to pursue transformative deals.

Embracing these insights will empower executives to craft bold strategies, optimize portfolios, and unlock lasting value in an ever-evolving market.