This article is an extract from the European M&A Outlook 2025. For the full report, please fill in the form here.
New EU legislation mandates stricter due diligence and liability assessments in M&A, particularly for AI systems. Compliance is likely to heavily influence transaction structuring, valuations and demand for insurance coverage.
Over the past couple of years we have seen the role of artificial intelligence (AI) becoming increasingly significant in M&A transactions.
The primary objectives in traditional M&A include achieving economies of scale, synergising operations and diversifying products or services. Technology, media & telecoms (TMT) M&A transactions add an additional layer: the acquisition of specific intangible assets such as intellectual property, data and innovative technologies, including AI.
In addition to the increase in the number of acquisitions of AI companies, AI has also become increasingly important as a tool in M&A transactions. Many players within the M&A world experiment with or use AI tools, including generative AI (GenAI), to enhance the efficiency and accuracy of due diligence or provide assistance during the review and negotiation of transaction documents.
The increasing significance of AI is further underlined by the entry into force of the European Union’s AI Act in August 2024 and its gradual applicability from February 2025. This establishes a regulatory framework for providers (including product manufacturers), users, distributors and importers of AI systems and is expected to boost investor confidence.
Reflections and projections
Recent examples of AI-driven deals in the TMT sector in 2023 include BioNTech’s acquisition of InstaDeep, a UK-based AI company, for GBP 562m and Amazon’s acquisition of Estonia-based Snackable AI, an audio content discovery engine. Another transaction that underscores the vitality of the TMT sector is Microsoft’s strategic move to invest USD 16m in Mistral AI. These acquisitions and investments illustrate the development of AI capabilities and the ongoing interest and confidence in AI technologies.
TMT is expected to remain one of the leading sectors for deal activity in Europe, despite a decline in aggregate deal value in 2023 due to lower valuations and higher financing costs. Its resilience reflects the continued demand for technology solutions and innovation across industries, as well as the expansion in digital markets. Subsectors such as software-as-a-service, cybersecurity, AI and cloud computing will offer high- growth potential and recurring revenue streams for PE investors. In addition, AI tools are likely to boost TMT transactions in the coming years, as companies seek to acquire or develop AI capabilities to enhance their products, services and processes and to gain a competitive edge in the evolving digital landscape.