2025 M&A Outlook: AI, Real Estate and Professional Services
Mergers & Acquisitions 2025 M&A Outlook: AI, Real Estate and Professional Services
by Demitri Diakantonis
The M&A landscape continues to evolve, shaped by shifting economic conditions, a new political regime and dynamic corporate strategies. As we move into the new year, Mergers & Acquisitions presents a week-long special series: The 2025 M&A Outlook. In it, we gather insights from dealmakers across all corners of the M&A world to explore key trends, emerging opportunities and potential challenges that will define the dealmaking environment in the coming year.
In today’s installment, we spotlight dealmakers’ 2025 outlook on the AI, real estate and professional services sectors. In AI, we’ll discuss how advancements in the sector are revolutionizing industries like M&A, PE and healthcare. For real estate, we’ll touch on expectations for a steady 2025 performance, driven by stabilized interest rates. Lastly, in the realm of professional services, we’ll highlight how outsourcing to specialized firms is gaining traction in the industry. Generally, executives agree that 2025 promises to be a year of transformation and opportunity in these sectors.
What’s your view for the year ahead in a sector you are most familiar with?
Artificial Intelligence
Ariel Deckelbaum, M&A Partner, Ropes & Gray: AI will continue to have a meaningful impact on the legal industry and M&A practice in 2025. Many large law firms, Ropes & Gray included, have devoted significant resources to the exploration, development and roll-out of nascent AI and legal-tech tools in recent years, which have shown increasing relevance to modern practice. The rapid improvements in generative AI tools – which can optimize M&A workstreams like diligence and contract analyses– have been remarkable over the past 12 months.
Ben Jackson, Director, Capital Markets, Leste Group: AI will continue to have a transformative impact on most businesses in 2025. I believe it will enhance our business operational efficiency, improve investor experience, and enable better decision making through advanced data analytics. However, it will also require investments in new technologies and upskilling the workforce to leverage AI effectively.
Jeff Jacobs, Head of M&A and COO of Investment Banking, Solomon Partners: By leveraging AI to identify new market opportunities or adjacent business models, companies will be better positioned to discover potential merger partners or business expansion strategies that align with their long-term goals.
Michael Janiszewski, Chief Operating Officer, Alter Domus: AI has already reshaped the private equity back-office and more recently has been used to support the front office too. There are already firms in the market that have developed proprietary AI-powered tools that are filtering deal opportunities and presenting dealmakers with lists of potential deal targets.
Wayne Kawarabayashi, Head of M&A, Union Square Advisors: AI is attracting a lot of investment capital, and we are starting to see M&A activity as well. AI is not only disrupting the technology industry, but it has the potential to disrupt every industry and business application and function. We are seeing increasing interest and activity on the venture investing front for growth capital and seeing corporate buyers interested in adding technology and engineering talent in AI. While not every company, use case, and technology will succeed, we do think the general trend of increased adoption will continue at an accelerated pace both for generative AI applications and the infrastructure needed to support the processing power to run these applications.
Byron Lichtenstein, Managing Director, Insight Partners: AI will impact VC portfolio management meaningfully. As firms continue to see larger portfolios due to longer hold periods, there will be a need to scale GPs and their teams to manage those larger portfolios. There are several AI capabilities that can significantly boost productivity when working 1:1 with companies, such as surfacing relevant “plays” from the incredible data set of value-add across the portfolio to date or analyzing the portfolio to identify places where needle moving changes can be made or exit preparation efforts may be warranted.
Joe Schauenberg, Managing Director and Head of Healthcare IT, William Blair: AI will continue to transition into healthcare. It’s only a question of how fast. The transformation to “personalizing medicine” – via synthesizing large amounts of patient and surrounding data to find the best care pathway for an individual – was the healthcare technology buzzphrase 5-6 years ago. AI can rapidly accelerate that transformation if providers, payers, regulators, et al. allow it to happen. In doing so, many very successful HCIT business models today – including labor-centric businesses – will face formidable challenges.
Real Estate
Ben Jackson, Director, Capital Markets, Leste Group: The real estate sector is likely to perform steadily in 2025. The stabilization of interest rates and capital markets should lead to higher commercial real estate transaction volumes, especially when considering the enormous amount of dry powder earmarked for the sector. However, real estate’s performance will vary by region and property type, with urban areas and high-demand markets seeing more robust growth.
Professional Services
David V. Duke, Partner, Kian Capital Partners: We spend a lot of time with what we call expert services. That is companies that provide outsourced expert services related to governance, compliance, testing and inspections, etc., whether it’s a consulting model or more of an “in the field” services company. We continue to see opportunities across that market as more businesses understand the value to offload those needs to firms that specialize and can solve issues, reduce risks and improve their operations in a more efficient and effective way than trying to build it on their own. For PE, it remains attractive given both the organic growth opportunities and fragmented nature of various segments.
