PwC: China’s M&A market transaction volume in 2024 increased by 24% compared with the prior year; M&A transactions are expected to see double digit volume growth in 2025

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Hong Kong, 28 February 2025 – The transaction value of China's M&A market in 2024 declined by 16% compared to 2023, dropping to US$277 billion, marking a recent low. However, the total transaction volume in 2024 increased by 24% compared to 2023, due to a significant rebound in venture capital (VC) activity. These are among the findings in PwC’s M&A 2024 Review and Outlook, which is released today.

In 2024, there were only 39 ‘mega-deals’ (transactions exceeding US$1 billion), the lowest in nearly a decade, with 18 involving state-owned enterprises. The industrial sector (nine large deals), high technology sector (eight large deals), and energy & power sector (six large deals) were particularly favoured by large capital inflows.

David Brown, PwC Asia Pacific Deals Leader said, “Looking at it on a half-year basis, it’s clear that the transaction volume in the M&A market has been steadily recovering over the past two years. Despite the lack of mega-deals, the transaction value in the second half of 2024 increased by 30% compared to the first half, reaching US$158 billion.”

In terms of M&A transactions by strategic buyers, the transaction value of domestic strategic buyers decreased by 10%, with the number of transactions down by 4%. Although the government has released several policies to boost the M&A market, participants remain cautious, anticipating more stimulus plans or an overall increase in confidence to enhance valuations. The industrial and high technology sectors remain the most attractive for corporate investments, with hot sectors like new energy vehicles, industrial upgrades, and generative AI continuing to drive M&A activity. Additionally, the financial sector was quite active in 2024, during which even smaller financial institutions underwent restructuring.

Private equity financing experienced a dramatic shift with renminbi funds gaining strong momentum, while dollar funds targeting China faced widespread fundraising challenges. The advantage of investing from domestic capital pools continues to be a key factor influencing this market landscape.

Private equity investments (M&A activities involving financial buyers) continued to face challenges, with overall transaction volumes down 11% and transaction values down 18%, resulting in the lowest level since 2014. Many foreign private equity firms are cautious about making new investments, with only 18 large deals dominated by financial buyers, eight of which were driven by state capital.

VC deals volumes (small transactions involving financial buyers—amounts less than US$10 million) were a major highlight, increasing by nearly two-thirds to over 6,000 deals. High technology and industrial M&A transactions accounted for 39% and 21% of the transaction volumes respectively, indicating a large number of small-scale deals in the market, such as early-stage financing in the AI sector.

Since peaking in 2016, Chinese Mainland outbound M&A deals have decreased, with transaction values declining annually. However, there has been a recent increase in consultations regarding Chinese outbound deal opportunities. Regarding transaction volume, high technology, industrial, and healthcare sectors proved the most favoured areas for overseas investments in 2024.

Looking ahead to China's M&A market in 2025, while challenges remain, such as the narrowing investment channels for foreign capital like USD funds within China and low valuation levels (expected to improve), many positive factors are also expected to have a favourable impact on the M&A market. These include some positive signs of economic improvement in China, pent-up M&A demand, a large inventory of private equity projects awaiting sale, and the potential for continued global interest rate reductions.

Sam Sze, PwC China South Advisory Leader said, “Thanks to ongoing SOE reform resulting in large-scale transactions, multinational companies taking measures to optimise their investment portfolios, the growing demand for overseas investments by Chinese capital, especially in Southeast Asia, and a large number of private equity projects seeking exits, we anticipate that M&A transactions in 2025 could achieve double-digit volume growth from 2024 levels.”
 

Notes

Download PwC’s M&A 2024 Review and Outlook: https://www.pwccn.com/en/services/deals-m-and-a/publications/ma-2024-review-and-outlook.html