As France’s economic activity suffers from the country’s political instability, merger and acquisition (M&A) transactions are trending downward. For business leaders, it is difficult in this uncertain period to consider external growth operations. Could investment funds be the answer? Insights from the experts at AURIS Finance, a consulting firm specializing in mergers and acquisitions.
The French M&A market is currently navigating turbulent waters. According to a study by PwC France and Maghreb, while the value of transactions in France held steady in 2024, the volume of deals plummeted by 29% year-over-year. The culprit: political uncertainty, which is prompting executives to exercise extreme caution. In 2025, only a minority of SME and mid-cap company leaders (45%, per a Bpi Lab study) plan to invest over the year. As a result, deal timelines are stretching out, and projects are struggling to reach completion. Industrial players, traditionally the driving force behind external growth operations, are becoming increasingly hesitant, preferring to focus on cash flow management rather than riskier transactions.
The Return of Investment Funds
While intra-French corporate deals are drying up, investment funds appear to be making a comeback. This return follows several years of inactivity in a post-health crisis environment that was particularly dynamic. During 2022 and 2023, funds chose to hold their positions rather than exit at a loss. Against a backdrop of inflation, their holding periods lengthened.
Capital Stockpiles
Currently, the resurgence of investment funds can be attributed to a mechanical phenomenon: after several quarters of waiting, they now have significant liquidity to reinvest—unemployed capital, or “dry powder”—and are feeling pressure to act. In an environment marked by rising debt costs, these players are emerging as the most solvent and quickest to seize opportunities. This renewed activity is notably reflected in the revival of Management Buy-Ins (MBI), where external executives take over a company with the backing of a fund—a setup that has regained appeal due to the lack of internal successors.
New Financing Channels
The strategy of these funds is currently focused on acquiring majority stakes or pursuing successive external growth (build-ups) in solid companies seeking additional financing to fuel their development. Company leaders, often facing tighter banking conditions, find in these investors partners who can provide not only capital but also operational and strategic expertise.
Increased Selectivity
However, funds are not positioning themselves on just any company. They are being more selective, targeting high-potential sectors—healthcare, energy transition, green industry, software publishers, and artificial intelligence. They demand mature projects, often in the industrialization phase (scale-ups), led by experienced teams. Consequently, the average deal size is increasing (up 11% in 2024 to $146 million, according to PwC). Larger deals (mega-deals), which reassure investors, are attracting more interest.
Our Experts by Your Side
While transactions may be fewer, their quality is improving. The return of investment funds to the forefront could reshape the French M&A landscape in 2025 and 2026, striking a renewed balance between financial investors and industrial acquirers. The experts at AURIS Finance specialize by sector. We stand by your side and support you in finding the best financial partner.
